The Society of Motor Manufacturers and Traders (SMMT) reported that
overall new car sales in the UK in 2007 rose to 2.4m, up 2.5 per
cent year on year. Diesels (up 7.7 per cent to 967,436 units),
superminis (up by 17,729 units on 2006) and small family cars (up
by 25,084 units) were particularly strong segments in what SMMT
chief executive Paul Everitt described as an “ultra-competitive”
market for new cars.
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In 2008, the SMMT forecasts that the new car market will
decline slightly to 2.34m units, based on the premise that the
“underlying economy remains strong and consumers continue to
spend”, shored up by attractive incentives and finance deals from
manufacturers.
Growth in fleet and business sales was strong (see table), and
“represented 80 per cent of the net volume gained in the year”, the
SMMT noted.
Interest rates held at 5.5 per cent
While welcoming the rise in new sales in 2007, Sue
Robinson, director of the Retail Motor Industry Federation (RMIF)’s
National Franchised Dealer Association (NFDA) warned that the
picture for 2008 may be far less rosy – and decried that the
decision by the Bank of England’s Monetary Policy Committee on
January 10 to hold interest rates at 5.5 per cent.
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By GlobalData “By holding the interest rate at 5.5 per cent, The Bank of
England is putting the brakes on spending at a time when it needs
to be encouraging consumer confidence,” she said. Dealers had felt
the effects of lower levels of consumer spending over the last few
months, Robinson added, with “the outlook uncertain unless interest
rates are brought down”. If consumers were to hold off from
big-ticket purchases in increasing numbers, the impact on the
overall economy would be “negative”, she said.
“The increase in new car sales in 2007 shows that consumer
confidence weathered the economic storms, but interest rates must
come down in 2008 for this level of demand to continue,” Robinson
said.
