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UK car sales to slide, says SMMT

The Society of Motor Manufacturers and Traders warns car sales will slide over the next two years and production will stagnate due to a ‘tougher economic climate and soaring supply costs’.

The SMMT has forecast that 2.48 million new cars would be sold this year and 2.42 million next year. That compares with 2.57 million last year, which was slightly down on 2003’s record of 2.58 million.

Output from British car factories for 2005 and 2006 is expected to flatten at between 1.6 and 1.65 million vehicles, says the SMMT.

Christopher Macgowan, SMMT chief executive, says: “Carmakers’ profitability will be under severe pressure because of the rising cost of steel and energy.”

The forecasts came as Government statistics showed that cars produced for the home market dropped 9% last year, although those made for export reached a record level.

“The UK hosts some of the most productive car plants in Europe but rising raw material and fuel costs, as well as unfavourable exchange rates, play their part in threatening future prosperity, particularly for companies in the supply chain,” says Macgowan.

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