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Demand for larger cars to slow

Demand for larger cars will start to slow due to forecasts in the downturn in house prices and an increase in unemployment for the first time since 1992.

The claim comes from Experian’s latest regional planning report which says dealers need to prepare in advance for the squeeze on consumer spending affecting sales of larger cars and 4x4s.

The report from Experian highlighted a faster downturn in the house market over the last six months and has forecast a decline in UK house prices of 7.6% over the next two years.

The report has also forecast UK GDP growth to slowdown to 1.8% in 2008 and further still to1.5% in 2009, affecting the level of job creation in the UK.

Kirk Fletcher, managing director of Experian’s Automotive division, said: "A car is arguably the second biggest purchase a consumer will make and financial concerns were already affecting used car sales, which have been falling since 2005.

"More and more consumers have been delaying their car purchase decisions. While sales are still strong in the larger car segments, they are not as strong as in previous years. The introduction of higher tax on these vehicles and the consequences of the global credit crunch could finally be the factors that push these segments back."

Fletcher said he still believed there would be pockets of growth in the market, with the least polluting cars likely to become top sellers in the coming years.

He said: "The challenge for dealers is to watch the trends, identify areas of growth and recognise what motivates different kinds of customers."

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