Car sales plunge, Bank of England cuts rates

Published: 06 November 2008

Following the sixth monthly decline in new car sales this year (down 23% this month), economists have revised market forecasts downwards, while the Bank of England has cut interest rates by 1.5%.

October’s 23% drop was the worst so far and trade body SMMT now fears sales could end the year at just 2.15 million cars. That’s 8% lower than the 2.34 million predicted to leave showrooms back in January and would be the worst market performance in more than a decade.

So when might thing get better for new car sales in the UK?

The pain is not expected to end in December. In 2009 new car sales could fall even further to just 1.92 million units. If true, that would signal the first sub-two million market since 1995.

Within October’s figures there was precious little good news. Jaguar and Volvo bucked the downward trend with sales rising 22.4 and 23.4% respectively, but elsewhere there was little to cheer.

Click 'Next' below to see how individual manufacturers have held up

Who have been the big winners and losers?

Premium manufacturers like Bentley, Land Rover and Porsche continued their woeful ride through the economic storm with sales down 47.6%, 57.9% and 38.3% respectively. However, even the volume car makers were not immune to October’s pain.

Renault had a shocking month, plunging more than a half to 4328 units while Peugeot and Mini reported losses of 40%. Smart, which had seen sales rise by more than a half so far this year, registered 587 models, 40% fewer than in October 2007.

While fleet and business sales were down, sales to private motorists have been hit hardest by the downturn. In October just 48,147 new cars were registered to private buyers, down from 67,656 last year, a decline of 28.8%.

For the few private buyers that did venture to showrooms last month, superminis reigned. Nine of October’s top ten selling models were fuel-efficient small models, in contrast to five for the market overall which includes sales to fleet and business buyers.

Any news from the Bank of England?

In response to these figures, and the wider economic climate, the Bank of England has announced an interest rate cut of 1.5%, taking rates from 4.5 down to 3%. This comes after the half percent reduction last month. It's the Bank's most dramatic reduction since 1981, and a moved aimed at boosting consumer spending.

Top 10 best sellers - October

   Total sales   Private sales
1 Corsa  7570  Fiesta 4675
2 Fiesta  7139 Corsa  2485
3 Astra 5640 3-series 1332
4 Focus 5027 207 1265
5 Golf 4237 Polo 1219
6 Mondeo 4123 Mini 1217
7 3-series 3220 Yaris 1060
8 Zafira 2689 Jazz 1059
9 207 2675 Golf 1045
10 1-series 2280 1-series 1039

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