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Car sales to fall as scrap scheme ends

SALES of new cars in the UK reached almost two million last year, which was the lowest level since 1995, the Society of Motor Manufacturers and Traders (SMMT) said yesterday.

Full-year sales fell 6.4 per cent from 2008’s total to 1,994,999 vehicles, despite the boost provided by the government’s £2,000 scrappage trade in scheme on cars over ten years old introduced last May.

The scrappage scheme has accounted for more than a fifth of all new car registrations, the SMMT said.

In the first six months of the year, new car sales fell by 25.9 per cent. In the second half of the year, they rose by 21 per cent.

The Ford Fiesta was the best-selling model of the year, followed by the Ford Focus.

SMMT chief executive Paul Everitt said sales for 2009 were “significantly above early expectations”.

New registrations in December rose by 38.9 per cent, the sixth consecutive monthly rise, helped by consumers looking to beat the VAT increase, the SMMT said.

However, there is now concern in the industry that sales will retreat once the scrappage scheme comes to an end in February.

The SMMT estimates that 2010 sales will fall back to below 1.8m.

Everitt said: “Another tough year awaits the UK motor industry in 2010, with new car registrations expected to be below 2009 levels and only limited recovery in the van and heavy commercial vehicle markets.”

Howard Archer, economist at IHS Global Insight, also thinks this year will be a tough one for the car industry.

He added: “The upside for consumer spending is likely to be limited for some time to come by high and still rising unemployment, low earnings growth, and consumers’ need/desire to improve their balance sheets in the face of high debt levels and a still worrying economic situation.”