Reason for optimism despite new car sales dip

Published on Tuesday 5 July 2011 21:59

NEW car sales in Scotland slipped into reverse in June, but didn't fall as fast as those for the UK as a whole thanks to the larger portion of retail rather than fleet sales north of the Border.

Scottish car dealers posted a 5.1 per cent fall year on year in the number of vehicles being registered, compared with a 6.2 per cent decline for the UK, according to figures from the Society of Motor Manufacturers & Traders (SMMT).

Douglas Robertson, chief executive of the Scottish Motor Traders' Association, said the difference was probably down to Scotland having a higher percentage of retail sales compared to England and Wales.

He said: "We are disappointed to see a drop in sales after the small rise in May. It is very tough going in the retail sector just now, but we fully expect to see a slow growth over the second six months of the year and are optimistic that September will see a 'new plate' surge in car sales".

Robertson said May's 2.9 per cent was "probably a blip" rather than the start of the expected second-half recovery in car sales, although he held out hope for an increase over the coming months. He added: "We've had two harsh winters and a lot of people weren't able to start their cars again until the snow cleared. So people are starting to look for replacements.

"A lot of the recession-related job losses now seem to be behind us, so people who still have jobs are becoming a wee bit more confident about parting with cash."

Robertson expected the run of bad winters to lead to a rise in 4x4 sales. "Previously, you could only buy more expensive 4x4s, like Land Rovers or Range Rovers or the BMW X5. But a lot of manufacturers - like Kia and Skoda - are now making more affordable family 4x4s."

New car registrations in Scotland fell to 15,274 last month from 16,092 in June 2010, with the UK figure dropping to 183,125 from 195,226. It was the 12th consecutive monthly drop for UK car sales, more than a year on from the end of the UK government's scrappage scheme, which stimulated the industry during the recession.

Robertson said that apart from May's "blip" Scotland's car sales had also been dropping for a similar period of time, once the effects of the scrappage scheme were stripped out of the data.

SMMT chief executive Paul Everitt added: "June new car registrations continued to perform in line with industry expectations, with robust demand in the fleet sector and a relatively weak retail market.The balance of demand makes this a tough time for vehicle manufacturers and their dealer networks.

"Slow, but steady, economic growth in the second half of the year should see volumes increase, although the overall market is still expected to be around 1.93 million units."

Diesel car sales rose 4 per cent last month and are up by 7.5 per cent in the first half of this year as cash-strapped motorists look for higher fuel efficiency.