Car sales rise unexpectedly in October

Car sales unexpectedly moved up a gear, rising 2.6 per cent in October compared to the same month last year, driven by sales of fleet and business cars.

The Society of Motor Manufacturers and Traders said sales to these customers outweighed a fall of 4.3 per cent in private purchases.

Sales of cars to businesses increased by 9.7 per cent and fleet buyers purchased 7.9 per cent more vehicles, as sales beat SMMT’s forecast by seven per cent.

The body’s chief executive Paul Everitt said the result was very positive considering the economic climate.

“Vehicle manufacturers and their dealer networks are working hard to offer consumers value for money through improved fuel efficiency, low running costs and innovative finance,” he added.

The figures represent a significant improvement over the 0.9 per cent year-on-year increase in the last three months.

The number for the past six months is even worse, showing a 1.5 per cent fall compared to the period last year.

Higher petrol prices and insurance costs are likely to have contributed to the drop in private sales, adding to worries about job security.

Howard Archer, chief European and UK economist at IHS Global Insight, warned that economic conditions remained extremely challenging for the industry.

“It seems inevitable that many consumers will be unwilling or unable to spend on big-ticket items like a car, given squeezed purchasing power resulting from high inflation, low wage growth and tight fiscal policy,” he said.

“There is also the very real worry for car manufacturers that fleet and business sales will come under mounting pressure from the current softness of the economy and businesses’ increased concerns about the outlook.”

Everitt agreed that market conditions would remain difficult, and expressed hope that the Chancellor’s Autumn Statement would boost consumer confidence.