'Watershed' for 32m UK motorists as petrol prices hit record high

Motoring groups warned the cost of fuel has reached a ''watershed'', and consumers will have to choose to cut back at the pump or the shops.

Petrol already costs more than 1.20 at many Scottish pumps, particularly in rural areas, but this is the first time the UK average has reached that level.

However, there was some good news for the motoring industry as new car sales increased by a quarter last month, compared to March 2009.

The four main political parties in Scotland have already clashed over petrol prices.

Alistair Darling tried to ease the blow to motorists by staggering the increase in fuel duty over the course of 2010-2011.

Both the Conservatives and SNP have called for a system where fuel duty falls when the price of oil goes up, and vice-versa, to help motorists and businesses. The Liberal Democrats want a preferential rate for people living in rural areas who are more reliant on their cars.

The new record price is partly due to the UK government increasing duty by 1p at the start of the month, the first of three rises which will take place in this financial year.

Adrian Tink, motoring strategist at the RAC, said: "Petrol prices have been rising steadily over the past year and have now reached the inevitable record high.

''In some areas, motorists will be paying close to 6 a gallon (131.9p a litre).

"With the election campaign now in full swing, Britain's hard-pressed motorists will be keen to hear what the political parties have to say about the escalating petrol prices.

''This is a key issue for Britain's 32 million motorists, who are watching their bank accounts drained every time they fill up."

The AA said petrol was now just over 10p a litre more than at the beginning of the year, adding more than 5 to the cost of filling a typical 50-litre tank. A two-car family's average monthly petrol bill rose from 233.32 to 254.60.

Paul Watters, head of public affairs at the AA, said: "For many drivers, today's record price underlines what they already know – the cost of petrol is becoming increasingly unsustainable.

"Comments from retailers confirm AA research showing that two-thirds of its members are cutting back to compensate for soaring petrol prices.

"The UK road-fuel market is clearly at a watershed – and there will be casualties among retailers and motorists."

A total of 397,383 new cars were registered last month, with the 2,000-discount scheme for trading in older models accounting for one in eight of them.

Dealers hope the boost provided by the joint government- industry scrappage initiative will continue to push up the figures until June, as a further 20,000 vehicles are still to be delivered to customers. This is due to a timelag of up to three months between cars being bought and registered.

Unusually, the increase in Scottish registrations last month was lower than across the UK, up by 15.6 per cent to 36,335.

The Scottish Motor Trade Association attributed this to more buyers switching back to the used-car market, which has traditionally been stronger in Scotland.

President Sandy Burgess said there was "a degree of uncertainty" over the future. He said although manufacturers such as Nissan were still offering scrappage-type deals, sales staff would focus more on used cars if new-model demand fell.

Mr Burgess also said the demand for car servicing – which is very profitable for dealers – was booming as drivers kept their vehicles longer.