British car sales slide 8.9 percent in September: trade data

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New car sales in Britain fell by 8.9 percent in September on a 12-month comparison, trade data showed on Wednesday, hit by the ending earlier this year of a government subsidy scheme.

That marked the third monthly drop, after sales tumbled by 17.5 percent in August, the Society of Motor Manufacturers and Traders (SMMT) said in a statement.

"The September market ... fell 8.9 percent to 335,246 units -- the second-lowest volume for the month since 1999," the SMMT said.

Britain's so-called scrappage scheme, which had offered subsidies for buying new cars in exchange for trading in ten-year-old vehicles, was launched in May 2009 under the old Labour government, but it ended about six months ago.

"The scrappage incentive scheme had a positive net contribution to the UK new car market, but has caused year-on-year monthly comparisons to be distorted," the SMMT added.

But it also noted that new car sales this year were expected to hit two million vehicles -- which is a modest increase on 2009.

"Despite an 8.9-percent fall in September registrations, demand for new cars has stabilised and will end 2010 slightly up on last year," said Paul Everitt, SMMT chief executive.

"It is important that, alongside the government's austerity measures, the comprehensive spending review (due on October 20) signals a strong growth agenda to boost consumer and business confidence."

Britain's Conservative-Liberal Democrat coalition government, which won power at a general election in May, is expected to slash expenditure in the review as it seeks to cut the country's huge public deficit.

"The sector faces difficult circumstances going forward," argued IHS Global Insight economist Howard Archer.

"Private sales are likely to be limited appreciably by the serious pressures facing households.

"The substantial fiscal squeeze will increasingly hit public sector jobs and consumers' pockets, while households already face high unemployment, muted earnings growth, elevated debt levels and pretty high fuel prices."

© 2010 AFP

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