New car sales increase predicted

Car dealers are reporting increasing interest in new cars ahead of the new ‘59 plate’ registration, which commences from 1st September onwards.

The scrappage scheme has already delivered an estimated 60,000 additional orders, the bulk of which have not yet been delivered. These extra registrations have been mostly budget cars ,from the likes of Kia and Hyundai, who have seen massive increases in sales of their Picanto and i10 superminis.

With consumer confidence increasing tentatively, even house prices increased by 1.2% in May. When house prices increase, new car sales tend to follow suit. During the ‘property boom’ of recent years, new car sales have hit record levels with an average of 2.48 million car registrations between 2001 and 2007. As soon as the housing market hit the buffers, new car sales deteriorated with only 2.13 million new cars registered in 2008. This pattern has continued in 2009 with sales down a massive 27.9% up to the end of May.

However dealers are starting to report increased levels of new car traffic into their showrooms, whilst sales of used cars have been strong for months. This should lead to a pick-up in retail activity, with the new 59 plate and strong manufacturer incentives helping consumers to buy new cars at bargain prices.

This won’t be enough to return to previous record levels of car buying, but the recovery is just starting.

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By Terry Hogan