Cars sales continue to rise but rate slows in October

UK car sales have seen a 20th successive year-on-year gain in October, with a four per cent increase. Although sales have continued to rise, they have moderated in October, when compared to the 21.1 per cent gain seen in September.

Private new car sales have benefitted from rising consumer confidence, increasing employment and demand amongst motorists for more fuel efficient cars. Part of the reason for continued growth is customers willing to spend after a significant holding off period, owing to the poor state of the economy.

Fleet sales rose 0.2 per cent year-on-year in October, while the small business sector rose 54.1 per cent. Car manufacturers will be encouraged by the increasingly rapid pace of economic recovery. However, there remain concerns that UK consumers' spending power is still facing significant pressure.

Howard Archer, IHS Global Insight:

Car manufacturers will be very aware that it is not all plain driving ahead with consumers’ purchasing power squeezed by inflation persistently running markedly higher than earnings growth while businesses generally remain keen to contain costs.

Annual earnings growth rose by only 0.7 per cent in the three months to August while consumer price inflation was 2.7 per cent.