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New car sales drop by 5.8%

New car sales were down 5.8% in the first half of 2005 compared to last year, according to figures.

A total of 1,296,485 new cars were sold in the first six months of the year and 227,623 were sold in June, down 4.8% on last year.

Sue Robinson, director of the Retail Motor Industry Federation (RMI) National Franchised Dealers Association, believes new car sales only show part of the picture.

“When you combine the new car figures together with the strong second hand car market, it is clear the consumer is still car-hungry,” she says.

According to Robinson, fluctuations in the new-car market are driven by consumer choice based on the options available.

“Over the last five years, following intense lobbying of Government, we saw a lowering of new car prices, with significant growth in the private market. The result was movement by many consumers from the high end of the second hand market into new cars.

“However, this intensely value-conscious group of buyers is now taking advantage of the wide availability of low mileage nearly-new cars, which offer new-car prestige at used car prices. They are currently tending to shop around.”

"The new car market could not sustain the record levels seen in the first half of 2004", says SMMT chief executive Christopher Macgowan. "However, while interest rates begin to bite across all retail sectors, figures from the car sector remain healthy. Dealers may be feeling the pinch but there is good news for consumers. More models are coming on the market and car prices have tumbled by 10% since 1998. Combine these factors with deals like nought per cent finance, free insurance, and money back offers and you have all the ingredients of a true buyers' market."

First half new car registrations (millions)

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