Another reason for the market decline expected this year by automotive experts is the stabilization of new car prices. Due to their high level compared to other EU countries, British prices have declined drastically. However, prices have shown a moderate increase since the beginning of 2004, as potential buyers contend with rising financing costs and higher new car prices.
RL Polk expects the market to drop further from 2005, approaching normal levels.
“Although the overall economic trend is still positive, the stabilization of car prices, the slowdown on the real estate market and the continued rise in interest rates means the major factors to stimulate car demand are now missing.
In addition, British households, which have accumulated a high amount of debt, are expected to enter a period of reduced spending. As a result, the British car market will drop to about 2.38 million new registrations (down 6.3%), “ it says.