UK car sales soften as consumer confidence declines

NEW car registrations fell by 3.5% in July as nervous consumers reacted to fears over the contracting economy. Nearly all major manufacturers felt the squeeze although some fared better than others.

The Society of Motor Manufacturers and Traders said the coming months were likely to remain challenging.

The UK new car market is now down 6.7% on the year to date and July’s figures represented the 13th consecutive month of declining volumes.

Paul Everitt, SMMT chief executive, said: “Robust demand in the fleet sector helped to bolster weaker private demand. While the coming months remain challenging, performance in the second half of 2011 is expected to keep the market on course to reach around 1.93 million units.”

Jaguar Land Rover saw its declining UK sales continue with the brands down 30.15% and 13.86% respectively.

The months ahead will be more interesting for Land Rover as it looks forward to launch of the Range Rover Evoque, which has been named Car of the Year by Auto Express. Land Rover has already said it has thousands of advance orders for the new model, which goes on sale next month.

However, JLR was by no means the only firm to see a dip.

Normally robust BMW saw a 2.2% decline, although its Mini division saw a 9.1% growth. Japanese manufacturers Honda and Toyota continued to struggle from the effects of the March earthquake.

Volkswagen was the best performer with its own brand vehicles up 8.6% and group subsidiaries Audi, Seat and Skoda all showing growth.

Its luxury marque Bentley, declined 16%, while Porsche was down 44.5%. Also in the luxury sector, Aston Martin saw a 35.5% decline.

In the volume sector, Ford retained superiority, although it was down 1%. Nearest rival Vauxhall maintained the number two slot but was down almost 3% year-on-year.

Niche manufacturer MG saw impressive growth of 28.6% and it is hoping for even better with the launch of new models.

Ford’s Fiesta and Focus were the number one and two best sellers for the month, as they have been for the year-to-date. Vauxhall’s Corsa and Astra occupy third and fifth slots – split by the VW Golf – again mirroring the yearly sales. VW’s Polo and Passat are also in the top 10 sellers for July.

Market trends show the fleet sector improving by 2.1%, although both business and private buyers are down, by 17.8% and 9.2% respectively.
 
John Leech, partner in KPMG’s Automotive practice in Birmingham , said earlier forecasts that car sales would end this year down by around 5% were starting to look optimistic.

“Private retail buyers are continuing to defer their purchase or buy used cars instead. However, UK manufacturers are equipped to survive this trend by exploiting strong export demand as foreign investment pours in,” he said.

“Vehicle manufacturers are set to face a ‘twin-speed’ global market for decades to come, with growing Far East markets and sluggish Western markets. As demand from domestic consumers drops, China’s luxury auto market is set to grow notably in the next two to three years. 

“China’s car market will expand and approach a penetration rate in line with other developed markets over the next 50 years, so there’s a real long-term source of growth on which to base investment decisions.”