New car registrations down 13 per cent in July

Posted on 7 Aug 2008 by The Manufacturer

The new car market has become the latest loser in the dire domestic commodity market as tightened purse strings no longer stretch to luxury lifestyle upgrades.

Sales of new cars fell 13 per cent in July – the biggest drop since late 2006 – with high end brands like Land Rover (-38 per cent), Bentley (-46 per cent) and Aston Martin (-44 per cent) among the biggest sufferers. Economist Malcolm Barr of JPMorgan Chase said the news was the “harbinger of more weakness to come” for the automotive industry. The car market in the UK is now down three per cent for the year.

As oil and fuel prices continued to rise unabated, consumers turned towards efficiency over extravagance. Sales of alternatively-fuelled vehicles went up 19 per cent last month. At 1479 though, this bracket still only made up less than one per cent of the total new cars registered last month.

New registrations of Diesel cars were down but only by 6.4 per cent and are up by 7.3 per cent for the year to date. They are projected a market share of 43.1 per cent for 2008, up three per cent on last year.

The Society of Motor Manufacturers and Traders revealed the downturn in a report released yesterday.

Chief Executive Paul Everitt said: “The 13% decline in July new car registrations reflects the continued deterioration in consumer confidence being experienced across the economy. Rising fuel and household bills, alongside falling house prices are making consumers reluctant to commit to new expenditure.”

Everitt said car makers are recognizing and accommodating for a shift in consumer demand by making new cars 22 per cent more affordable over the last decade and by developing fuel efficiency technology to further cut costs for drivers.

“Industry needs the support of government in order to encourage the uptake of lower-emitting vehicles and ultimately lower the cost of motoring for consumers,” he added.

Though recognizing that the UK market will remain challenging, Land Rover corporate communications manager Mark Foster said the market should be “wary” of market analysis based on one month’s sales. Indeed, July, like August, are habitually slow months for the automotive industry and the SMMT said it would be September’s sales that could provide an insight into a shift in underlying trends.

“Across Europe and the US it’s true that the premium automotive market in which we compete has been the most badly hit,” Foster conceded. “But, while we don’t expect the North American situation to improve any time soon, we are confident we can take measures to claw back sales in the UK.”

Foster said the firm’s export markets in growths areas like Russia and the Far East provide the security for Land Rover to overcome weak domestic conditions. Seventy-eight per cent of its vehicles, all of which are still made in the UK at plants in Solihull, West Midlands, and Halewood, on Merseyside, are now shipped abroad. With sales in Russia having risen 83 per cent to become the third biggest market for the company, Foster said the firm were on course this year to record its second-highest sales in Land Rover’s 60-year history.

The biggest selling car last month was the Ford Focus at 8760 units. It was followed by the Ford Fiesta, Vauxhall’s Corsa and Astra, and the Volkswagen Golf in the top five. The Focus is the biggest selling vehicle in the UK in the year-to-date.