UK Economy

New car sales fall for first time in a year

LONDON (Reuters) - New car registrations in Britain fell for the first time in a year in July after the withdrawal of a government scheme to prop up sales, which may remain muted in the coming months, an industry body said on Thursday.

The Society of Motor Manufacturers and Traders said registrations fell 13.2 percent on the year last month to 136,446 vehicles and may stay weak as uncertainty about the economy deters people from making major purchases.

Analysts noted that the prospect of deep government spending cuts and tax rises were already weighing on consumer confidence and augured ill for the car market.

“The more worried that consumers are, the less likely they will be prepared to splash out on as big-ticket an item as a car,” said Howard Archer, economist at IHS Global Insight.

Car sales had been supported in the last year by a government-sponsored scrappage scheme that gave motorists a cash incentive to trade in their old vehicles for new fuel-efficient models.

The scheme was closed at the end of March, but sales held their ground helped by strong demand from the large-scale fleet market.

However, that too has tailed off, with fleet registrations rising just 2.7 percent on the year, while registrations from business customers fell 6.5 percent. Private customer registrations were down 28.5 percent on the year.

“A drop in private registrations compared to the scrappage-fuelled months of 2009 was expected and has brought the first market decline for 12 months,” said Paul Everitt, SMMT chief executive.

“Subdued consumer confidence and a still fragile economic recovery make the outlook for the remainder of 2010 challenging, but a stronger than expected first half means full year volumes are still forecast to exceed 2009’s total,” he said.