Economic concerns as new car sales stall

Published on Wednesday 7 July 2010 14:21

SALES of new cars in Scotland fell last month, in stark contrast to Britain as a whole, which recorded an overall rise, dealers said yesterday.

In an indication that the Scottish economy is continuing to struggle, car sales in June totalled 16,092, a drop of 6.03 per cent from June, 2009 when 17,124 cars were sold.

By comparison, car dealers in the rest of the UK experienced a surprise increase of customers of 12.56 per cent with sales of 179,134 cars in June compared with 159,140 the previous year.

The sales boost was principally for company cars, or the fleet market as it is known, which comprises a much larger market in England.

Yesterday, Sandy Burgess, the president of the Scottish Motor Trade Association, said: "We are obviously disappointed to see a downturn in new vehicle registrations for June.

"However, we shouldn't lose track of the fact that the year-to-date figures for Scotland are showing as increased by 11.22 per cent on 2009 and that six of the Scottish regions are still showing significant growth with only three recording a decline, albeit one of those being our largest region, Strathclyde.

"When I look closer at the rest of the UK in June, one significant factor relevant to the increase is sales in the business vehicle market, which has increased by 25 per cent on last year.

"Because these registrations are predominantly south of the Border, the impact of this will contribute greatly to the aforementioned 12.56 per cent growth in the rest of the UK."

The new figures reflected the findings of CBI Scotland, whose assistant director David Lonsdale, said: "Our survey of motor traders found a similar recent dip in sales volumes, though in contrast it reported an improving trend in sales of car parts and accessories.

"The upcoming rise in VAT, which will take effect in early January, may however spur some advance purchases of vehicles in the second half as people seek to avoid paying the extra tax."

The figures have been taken as evidence that Scotland is still struggling to climb out of recession. Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: "The long slow climb out of recession was always going to be a steep hill to climb and, therefore, you have to look at the overall picture, not the monthly dip.

"The motor trade is slowly but surely rebuilding its business after the short-term boost of the scrappage scheme. When many fleet sales which service Scotland are actually commissioned from English offices, it's easy for the picture to get skewed. Caution in major capital spends for the average consumer remains understandable, but we are encouraged that the overall trend is upwards."

As many new cars are greener compared with older models, Neil Greig, director of policy and research at the Institute of Advanced Motorists, said it was unfortunate that sales had fallen: "New cars bring many environmental and safety benefits so it is disappointing that sales show signs of tailing off after the success of the scrappage scheme.

"For customers though, it could mean even better deals so shop around for bargains in the run up to the new registration letters in September."

Philip Gomm, a spokesman for the RAC Foundation, said: "These figures show the man on the street is still nervous about the state of the economy and not ready to commit to such a major purchase unless absolutely necessary.

"While pent-up demand might continue to grow, the fear is the rise in VAT in 2011 will deliver another blow to the motor trade."