Car sales down in October with weakness ahead, industry warns

October showed more weakness in UK auto sales, an industry group said yesterday.

Total UK automotive sales fell 22.2 per cent in October, to just over 131,000 units, according to the Society of Motor Manufacturers and Traders (SMMT), with further decline likely in the next few months. Despite the declines, total car sales year-to-date are up 1.5 per cent over 2009.

Total new car registrations are forecast to be 2.026m this year, a 1.9 per cent increase from 2009. The decline comes as the SMMT chief executive Paul Everitt sees “slow, but steady” economic growth boosting registrations in 2011, according to the trade body.

Other analysts think the sector faces hard times next year. Government budget cuts and a rise in VAT tax may equal less disposable income, according to IHS Global Insight economist Howard Archer.

“These pressures will make consumers’ very careful about splashing out on as big-ticket an item as a car,” Archer said. But Archer also said consumers may buy more cars before the VAT rate increases to 20 per cent next year. Corporate buyers have also stayed out of the car market, suggesting pent-up demand.