UK car sales decline as private buyers stay away

New car sales in the UK fell by 1.7 per cent in May compared with May 2010 as sales to fleets failed to offset a decline in purchases by individuals, new data shows.

There were 150,431 new car registrations in May, the Society of Motor Manufacturers said.

The decline was the smallest monthly fall since June 2010 when the government scrappage scheme ended, though, and far lower than April’s 7.4 per cent decline.

“The marginal drop in new car registration figures is a welcome sign that the rate of slowdown in the sector is starting to abate. This is not to say that the industry is firmly on the road to recovery, however,” said Richard Lowe, head of retail and wholesale at Barclays Corporate.

“With concerns over decreasing household budgets and the rising cost of fuel, it will take a while for the industry to be granted a clean bill of health.”

Private car sales slumped by 15.3 per cent year-on-year in May at 60,964 units.

But fleet sales rose 11.1 per cent to 83,120 units, while business sales rose by 0.7 per cent year-on-year to 6,347.
“It is evident that many consumers have become less willing or able to spend, and they are likely to think very hard before splashing out on a major item like a new car,” said Howard Archer, chief economist at IHS Global Insight.

“Not only are car sales being pressurised by January's VAT increase from 17.5 to 20 per cent and current record high petrol prices, but private sales are likely to be dampened appreciably by the serious pressures facing consumers.”