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Car sales still plummeting despite scrappage handout
Robert Lea and Hugo Duncan04.06.09
Car sales remain in crisis despite the Chancellor's attempt to kick-start the market with a £2000 scrappage bribe.
Latest figures show that new car registrations crashed 24.8% with luxury marques and Chelsea tractors bearing the brunt.
The news, which indicates the consumer economy remains in a critical condition, came as the Bank of England vowed to continue printing money to revive the economy.
The Bank today left interest rates unchanged at their 315-year low 0.5% and said it would keep its programme of quantitative easing “under review” having last month extended it by £50 billion to £125 billion to encourage spending.
The new car sales fall is even worse than the 24% recorded in April and comes despite a fortnight of the scrappage scheme being in force in May.
Under the scheme owners of cars at least 10 years old get incentives of at least £2000 to trade in and buy a new motor.
The Government is claiming that in the last two weeks of May 35,000 cars were ordered through the scrappage scheme.
Given that some of these transactions would have completed in the month, that makes the underlying rate of decline in May car sales even worse than reported.
Sales figures for June now appear ever more important as an indicator for the state of the economy.
June is traditionally the biggest car-selling month outside the new registration periods of March and September.
Dealers will be hoping the scrappage scheme takes off because the current rate of decline indicates showrooms are shifting 1750 fewer cars a day compared with a year ago.
Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders which compiled the figures, conceded: “While consumer confidence is improving, the UK motor industry is still facing a difficult climate.”
He said interest in the scrappage scheme is “encouraging” but added: “It will take time to feed into registration figures.” The data reveal luxury brands and Chelsea tractors suffering the most.
Sales of Bentleys are down 64% this year, Daimler is off 61%, Lexus 42% weaker, Aston Martin 40% lower, and BMW down 32%. Sales of Chrysler Jeeps have crashed 64%.
The stars of last year's sales trend toward smaller cars are also hurting: Mini is down 32% and Smart car sales have fallen 8%.
Among the giant volume carmakers Ford, with its market-leading Fiesta and Focus brands, is down 17% while sales of UK-based Vauxhall, with its rival Corsa and Astra models, are down 29%.
Research from the Retail Motor Industry Federation reveals dealers will not be making a fortune from the scrappage scheme.
The figures show that around half the orders are for cars cheaper than £8000 and a further quarter in the £8000-£10,000 range.
Two thirds of the vehicles ordered have engine sizes smaller than 1.3 litres.
More than three-fifths of people taking advantage of the scrappage incentive are aged between 45 and 60.
Philip Shaw, UK economist at Investec, said the Bank could extend the quantitative easing target again next month.
Reader views (8)
Where is the incentive to buy under the scrappage scheme when you can get a 6 - 9 month old car for a substantially greater saving, especially on big volume cars like Astra / Focus / Vectra etc. I would rather save the cash and buy a 6 month old car which would give me an even bigger discount.
- Danski, Largs Scotland
Al, Kingstown UK Well said.
Our money should be used to help build the infrastructures required to refuel whatever new technologies are going to be used in the future; hydrogen looks very appealing in the long term and would require massive investment replacing the petrol stations
I was thinking of buying a tesla
- Ge, Kernow
Eh up Keith, do you work in the business. I do. We are getting good quality, very low mileage cars that are 10 years old traded in and being destroyed, whilst the old high mileage knackered scrappers are still buring oil and spewing out pollution. Great idea, very worthwhile, my backside!!!
- Al, Kingstown UK
I see many 09 cars appearing on our congested roads in the last month or so - the problem is, they are mainly Audi`s convertables, BIG 4x4`s or BMW sports mostly it would seem driven by young ladies - they seem to be the only ones with money to buy (and fuel up) nowadays!
Nice to know part of our taxes are going to subsidise the purchase of gas guzzling imports for the deserving - who presumably, couldn`t otherwise quite afford them!
I`m sure they`re at least grateful to Gordon Brown, if not to the thrifty taxpayer.
- Darius Midwinter, London UK
Stop penalising motorist and go after illegal drivers, no insurance, tax etc only.
- Mike, London
I see Keith still does not get who is paying for it in the end.
- Freddie, London
But as you can see from the graph the rate of fall has dropped off dramatically, so the Govt scheme was s great idea and very worthwhile
- Keith Price, Luton, England
Not many people who own a 10 year old car can afford or wish to own a new car. The scheme was always half baked and does not force people to buy green cars either.
- Gary, Brentwood 1
