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UK - New Car Sales Slumped, Consumers Losing Confidence
Dec 10, 2008

Sales of new cars in Britain registered the sharpest decline in 17 years in October 2008 due to reduction in orders, weakening consumer confidence and increased tax on carbon emission.

Society of Motor Manufacturers and Traders (SMMT) revealed that in October 2008, new car sales in the UK recorded their most rapid decline since 1991, as reported by BBC.

In October 2008, the UK sold 128,352 Units of new cars, 23% down on YOY basis. During the same period, sales of private car decreased by around 29% while business sales dipped by 43.6% and fleet sales by 16.3%.

The sales of luxury cars suffered the most whereas with sales of 1,886 vehicles in October 2008 as compared to 3,150 Units sold in October 2007, mini sales saw a fall of 40%. Moreover, the total new car sales for the period of Jan-Oct 2008 closed at 1.92 Million Units, 8.7% down from Jan-Oct 2007.

The primary reason that led to this decline is the weakening demand due to the economic decline in the country. The consumer confidence in the country has been hurt by the economic crisis and expected recession. Also, the credit crunch prevailing in nearly all parts of the world is putting negative impacts on the British car industry. This is in accordance to the difficult credit availability for consumers in the UK that is compelling them to keep a distance from the automobile showrooms.

Moreover, increasing inflation in the UK is also making the consumers reluctant to go for expensive purchases. Thus, the automobile sector of the country is witnessing a really bad time. Additionally, the government is putting pressure on the car manufacturers by raising tax on carbon-dioxide emission in an effort to bring down the level of carbon-dioxide emissions.

According to a Research Analyst at RNCOS, “The British automobile sector is facing a decline mainly due to the global economic turmoil. Also, this weakness in the auto industry is pulling down the British production. Hence, the need of the hour is to take firm steps to restore the confidence of the consumers. To overcome this decline and boost the car sales, the financers should ensure easy credit availability to the consumers and attract them back to the showrooms.”

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