Government needs to act now after new car sales fall by 21pc
Mar 6 2009 by John Cranage, Birmingham Post
Calls for the Government to do more to help the car industry were renewed yesterday following figures that showed registrations fell by more than a fifth year on year in February.
The situation in the UK was in stark contrast to that in Germany, where the new car market rebounded strongly last month thanks in part to the federal government’s incentive to owners of old vehicles to trade up to new, cleaner models.
The Society of Motor Traders and Manufacturers (SMMT) said new car sales were 21.9 per cent lower than a year ago at 54,359 units last month.
February is traditionally a quiet month for car sales as many buyers await the new registration plate in March, but the figures show that with the Government’s £2.3billion aid package still to take effect, UK makers are at risk of being left behind by their European counterparts.
Despite that, February’s fall was not as severe as some automotive industry experts had expected.
Eric Wallbank, Birmingham-based head of automotive at Ernst & Young, pointed out it was better than the January result, which saw a 31 per cent fall.
“Nevertheless it is a worrying indication of the rapidly declining health of the UK’s automotive industry and there can be little doubt that if these figures continue we will see further distress and job losses in the sector over the coming months,” Mr Wallbank said.
So-called scrappage schemes now operate in the other five major western European car markets and seem to be stimulating sales, he said.
But he added: “When you consider that most cars manufactured in the UK are exported and that the majority of UK car sales are imports, you have to question whether a UK scrappage scheme would be of similar benefit to manufacturers producing in the domestic market.”
SMMT chief executive Paul Everitt said: “Other European countries have been proactive in assisting their automotive industries and it is imperative that the UK Government increases the pace in responding to industry proposals for a scrappage scheme and access to finance and credit.”
The SMMT said the new car market is now expected to fall to 1.72million units in 2009 from 2.4million last year.
Meanwhile, Vertu Motors, owner of the Birmingham-based Bristol Street Group of dealerships, told its investors that it saw new car sales fall by 16 per cent on a like-like for basis between September and January compared with a 27.4 reduction in the market overall.
Used car sales for the period rose by 12 per cent but falling prices had an impact on margins, the company said.
