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The pace of decline in the number of new car sales slackened dramatically last month as the Government's £2000-for-your-old banger scrappage scheme kicked in with a vengeance.
Sales were down 15.7% on a year earlier, but that was the best annual rate of decline for nearly a year, the Society of Motor Manufacturers and Traders (SMMT) reported. Previous months had seen falls of between 40% and 55%.
However, news of the fillip to the consumer side of the economy did nothing to help the pound this morning, which fell heavily as it was seen ever more likely that the Bank of England would pump more cash into the quantitative easing programme, known as “printing money”.
The Bank's monetary policy committee will debate the strategy at this week's interest rate-setting committee and make an announcement on Thursday. Interest rates will be left on hold at the current record low of 0.5%.
The pound fell against the dollar and the euro this afternoon ahead of that meeting and potentially nasty figures on industrial production due out tomorrow.
Economists warned against reading too much into the car sales figures, which they warned could start plummeting again as soon as the scrappage scheme ended.
Motorists handing in a car older than 10 years can qualify for £2000 off a brand new one, with the discount being funded 50-50 by the dealer and manufacturer.
The SMMT remained upbeat, however. Chief executive Paul Everitt said: “We are now beginning to see the positive impact of the scrappage scheme translate into new vehicle registrations. We expect the pace to increase in the coming months, but we can already see the industry making steady progress on the long road to recovery.”
Makers of cheaper small cars were the biggest beneficiaries of the scrappage scheme.
Sales of Hyundais almost doubled to 5265, while Britain's best-selling marque — Ford — was up 4% to 29,803 cars.
Luxury models, including Jaguar Land Rover, which launches a new model this week, did not see a significant increase.
Reader views (5)
Free hand outs would put the brakes on any business that's in decline.
- Royston Amphlett, Bournemouth England, 07/07/2009 06:48
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Great initiative? It has concentrated the sales of cars in to a 3 month window, which will be followed by the lowest sale since the early 1970s. Car Salesmen are already afraid.
- Dave Davies, Basingstoke, Hants, 06/07/2009 16:45
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Before we get too carried away, we are talking about a decrease in the rate of decline in sales. This may be welcome news, but it comes as other competitor countries in the EU in particular (e.g. Germany) are reporting a return to increasing sales, some by over 12%. Once more the data suggests the UK is coming out of the downward spiral slower than most and that is a continuing concern when so many billions of debt have been accrued. Lt's not cheer until we have seen Gordon Brown's bill.
- James Elliott, Eastbourne UK, 06/07/2009 16:41
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Well done Gordon Brown - this was a tremendous initiative
- Keith Price, Luton, England, 06/07/2009 16:08
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Why doesn't the Government give a £2.000 scrappage scheme to cycle and motor-cycle owners to replace their old machines?
Come on; lets be fair here; equality for all etc.
- Mickinlondon, london., 06/07/2009 14:56
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