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Buyer incentives fail to halt sales decline

Society of Motor Manufacturers and Traders data reveals that sales of new cars are on the slide, with retail registrations taking the biggest hit.

Personal purchases were 11.9% lower year-on-year in June following a 9.5% slump in May – the fall over the first half of the year was 4.9%.

Dealer and manufacturer profitability is also being battered. “The prices of new cars have failed to match headline inflation as intense competition has kept them down,” say SMMT analysts.

June registrations totalled 209,190 (6.1% lower than a year earlier, and the year’s steepest monthly decline). The six-month total was 1,247,479, a fall of 1.56%.

The slowdown is blamed on rising household costs which have dampened consumer confidence.

Dealers say only heavy carmaker investment in consumer incentives and retail bonuses is preventing a more dramatic decline.

The SMMT is to review its forecast totals for the year (currently 2.335 million, down 2.9%) and for 2009 (2.325 million, down 0.4%). The outlook for the second half is gloomy.

Ken Savage, chairman of top 20 Perrys Group, said: “We outperformed the market on volume in the first half of the year, but our profitability was down because our sales staff didn’t want to let deals go.

“The next six months looks very worrying because we think the market will be an awful lot worse. We are seeing the start of retail buyers trading down a segment because they want a more fuel-efficient replacement car. The higher car tax bands will encourage this.”

The half-year sales performance for several carmakers shows significant declines.

In 2007, Honda was 8.48% up year-on-year but is now 7.19% down year-to-date.

A spokeswoman said: “We are suffering the same market conditions as some other manufacturers but we are still pleased with our performance. We now have the new Accord saloon on sale, with the Tourer to follow in September, and our dealers will have the new Jazz by the end of the year. “We are confident of achieving our target of 110,000 registrations.”

French manufacturers, with no UK assembly plants, are suffering badly over exchange rates. New models failed to prevent significant first-half declines for Renault (-14.88%), Citroën (-11.79%) and Peugeot (-9.43%).

Ford was around 10,000 units ahead of Vauxhall but both were down (by 3.72% and 0.73% respectively).

With Corsa and Astra, Vauxhall took the top two best-seller slots for the first time since February 2000, ahead of Ford’s Fiesta and Focus.

Volkswagen was 0.96% higher, but the German premium trio continue to set the pace despite the gloomy economic outlook: BMW was 12.91% ahead, Mercedes-Benz 4.28% up and Audi 3.22% growth. From a low base, Jaguar also improved, up 12.45%.

Some value brands are doing better than the overall market, led by Kia (28.95% up), with rises also for Daihatsu (22.50%), Chevrolet (12.30%), Skoda (6.47%) and Hyundai (3.90%).

1 Vauxhall Corsa 10,238
2 Vauxhall Astra 9,952
3 Ford Fiesta 8,959
4 Ford Focus 8,939
5 BMW 3 Series 6,535
6 Volkswagen Golf 5,703
7 Mini 5,209
8 Vauxhall Zafira 5,059
9 Peugeot 207 4,783
10 Vauxhall Vectra 4,338

To see the full June registration figues please see page 41 in the 11 July issue of AM. To subscribe to AM magazine click here or call 01733 468659.

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