Financial and Business|

UK Car Sales Drop 4.4%

Car ParkAccording to the Society of Motor Manufacturers and Traders (SMMT), the number of car registrations in the UK fell 4.4% to 1.94 million in 2011. This is the lowest amount of registrations in over ten years. This followed a continued drop in new car demand last month at 3.7% compared to the same month in 2010. This, however, is a contrast to the the strong increase in production over the previous six months. Meanwhile, diesel and other non-petrol cars continue gaining market share.

The industry body’s figures show that car registrations are still 25% below their 2003 peak of 2.58 million. It’s also just the second time the number has fallen below the two million mark since 2000. The first time was in 2009, but it’s not as sharp as the group had predicted.

The most popular new car was the Ford Fiesta, while the Volkswagen Golf was the most popular diesel vehicle. The shift to driving smaller cars, new technology and regulatory requirements all combined to help push the average rate of carbon emissions on new cars to a new low of 138.1g per km last year. The average efficiency of fuel also hit a new high of more than 52 miles per gallon.

The monthly and full-year figures show the extent to which the market is being overwhelmingly supported by fleet buyers, who are trading in their older cars for newer ones while individuals keep theirs. For the year, fleet registrations rose 4.7% last year and private registrations dropped 14.1%. RMI National Franchised Dealers Association, which represents motor retailers, director Sue Robinson says that the fall in the retail market reflects an unchanging lack of confidence among consumers.

SMMT, which represents carmakers, chief executive Paul Everitt says that last year was challenging for the motor industry in the UK. Weak economic growth will continue making trading conditions in 2012 tough. However, the combination of exciting new technologies, record numbers of new and updated models and substantially improved fuel efficiency will help encourage consumers to visit showrooms. His group predicts that sales will remain stable for the year and begin to increase more strongly starting next year.

IHS Global Insight chief UK and European economist Howard Archer wrote that this year will be very challenging and problematic for car sales. It’s hoped that consumers will have more purchasing power as the year moves on and inflation falls, he adds. Deloitte says that it expects new car registrations to shrink another 5% this year to 1.84 million.

British Vehicle Rental and Leasing Association chief executive John Lewis tells reporters that last year was a challenging year for the British motor industry, and it’s been fleet retailers that have purchased almost 60% of all new cars sold. This year could be even harder, and they expect fleet customers to continue dominating the market.

 

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