UK car sales slump as credit crunch bites

Published: 07 July 2008

It’s finally happened. The new car market has succumbed to the economic slowdown and punters are staying away from showrooms in droves.

Latest figures from industry trade body the SMMT showed an 11.9 percent fall in private sales in June 2008 to 83,425 cars. That’s the biggest month-on-month drop since February 2006 and a tell-tale sign that consumer confidence and soaring fuel prices are finally beginning to bite in the showroom, as well as on the high street.

Real people shunning new car purchases

Even including fleet buyers, the June 2008 figures look bad. Demand was down 6.1 percent, the steepest drop so far in 2008. Total new car registrations in quarter two were down 2.5 percent, compared to a 0.7 percent fall in quarter one.

Yet for months, new car sales seemed to be defying the gloom. The huge March 2008 market, which takes around 17 percent of total sales in a year, held up well. Sales to private buyers fell 1.4 percent compared to the previous year, but that still meant 222,788 new cars left showrooms. Industry experts had forecast far worse.

And despite the suggestion that pre-registrations were propping up a faltering market, today it is clear that things have got a lot worse. In quarter two, private demand slumped 7.9 percent, on the back of a more modest 2.4 percent fall in quarter one.

‘Tougher times ahead’

Surprised by the market’s resilience at the beginning of the year, car makers are now resigned to the inevitable. ‘This slow-down is not unexpected, but signals an increasingly tough retail environment,’ said Paul Everitt, chief executive of SMMT, which represents manufacturers.

Sue Robinson, director of the National Franchised Dealers Association, was more bullish. Consumer uncertainty was partly the Government’s fault, she said, adding enigmatically that it should clarify ‘its intentions towards the motorist.’