The 2007 market was up 2.5 per cent at 2,404,007 units with private
demand holding firm. Fuel-efficient diesel models took a record
share of 40.2 per cent or 967,436 units. ‘Supermini’ and small
family cars also posted growth, up 17,729 and 25,084 units
respectively. “Last year, demand for new cars was stronger than
many had predicted,” said Paul Everitt, SMMT chief executive.
“There is little sign that the US credit crisis or rising fuel
prices have affected demand and we foresee only limited changes
through 2008. The UK economy currently remains resilient and the
new car market is ultra-competitive. Car makers will continue to
fight hard for every sale and consumers will benefit from
unprecedented choice and excellent deals.”
Registrations in December rose for the fourth successive month and
for the ninth time in 2007. The improvement in private demand in
2007 was encouraging, since some commentators had predicted a slump
on the back of the crisis in the banking sector.
However, the UK Fleet Services Market Development Report predicted
that fleet car registrations will fall by 1 per cent in 2008. It
also expects small business sales to fall by 6 per cent.
The CBI has downgraded its forecast for UK growth in 2008 for
the third quarter running, due to continuing credit market
difficulties and record oil price rises, allied to weaker domestic
and global demand. In its latest quarterly economic forecast the
business group put next year’s annual rate of GDP growth at 2 per
cent, down 0.2 per cent on September’s figure.
Consumer confidence has already weakened due to the ongoing
problems in the financial markets and the continuing high energy
and petrol costs. Consumer spending is expected to slow more
sharply than previous thought, with growth falling from 3.1 per
cent this year to 1.9 per cent in the next. The rate of increase in
real household incomes is expected to pick up modestly following
weaker growth in 2007, however, offering some support to consumer
spending.
The CBI forecasts slower growth in investment in 2008 (1.8 per
cent, down from 5.7 per cent this year), led by modest falls in
property-related expenditure following strong growth this year. The
outlook for other business investment remains relatively healthy,
however. Although growth in the world’s advanced economies will
slow slightly next year, the continued robust growth of emerging
economies and expected depreciation of the pound will help support
export markets and shore up the UK’s economic prospects. Producer
price inflation has accelerated, with factory gate inflation
reaching a 16-year high.
Elsewhere, earnings growth remains relatively benign despite
continued tightening in the labour market. The annual rate of
output price inflation for manufactured goods rose to 4.5 per cent
in November from 3.9 per cent in October – the highest since August
1991. The largest contribution to this increase came from higher
prices for both petrol products and food which, on an annual basis,
rose 18.5 per cent and 6.6 per cent respectively. Meanwhile, higher
oil prices were the key factor pushing up manufacturers’ input
costs, with the annual rate of input price inflation increasing
from 8.5 per cent in October to 10.3 per cent. This is the fastest
rate of increase since July 2006.
