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Price cuts release demand

Heavy national advertising of special offers by the major carmakers brought buyers back into the market in May.

Dealers said the increased sales were caused by a combination of pent-up demand from fleet and leasing companies and a realisation among retail and small business customers that there are genuine bargains available.

But they cast doubt on the 10.4% increase in sales claimed by the Society of Motor Manufacturers and Traders.

Most dealers reported trade had been patchy rather than booming and customers were only buying if they needed to or if the price was right. Preregistration and bulk fleet deals to daily rental companies gearing up for the summer are both cited as likely causes of the increase.

As the market moves into the traditional slow months of June and July, the prospects do not look good. Dealers are warning many customers are expecting prices to fall further - a view which has been fuelled by continuing national press reports of price cuts up to 30%.

Adrian Rushmore, Glass's chief car editor, said: “The market remains hesitant and manufacturers need to take the initiative.

“Retail customers believe dealers are about to get greater discounts and new car prices are about to fall.”

The official SMMT registration figures showed 194,113 units in May, up 10.4% from 175,898 last May - itself a good month on previous years. The market as a whole has recovered the ground it lost after a poor April and, year-to-date, is up by 2.8% at 1,023,085.

The SMMT continues to predict a 2.2m car market for the year as a whole.

Christopher Macgowan, SMMT chief executive, said: “Car buyers are taking advantage of the spectacular deals on offer as manufacturers continue to position their products competitively.”

Private car sales were up by 4.5% and the top 10 best sellers for the month reflected the retail nature of the market. Traditional big fleet sellers, such as Ford Mondeo, have slipped down the charts while Vauxhall Astra, Corsa and Peugeot 206 are gaining ground.

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