October 4, 2013 / 8:18 AM / 6 years ago

British car sales surge back up to pre-recession levels

LONDON (Reuters) - New car sales in Britain soared to their highest level in more than five years last month, lifted by a brighter outlook for the economy, attractive financing deals and demand for new fuel-efficient models.

Cars are displayed outside a Volvo showroom in west London October 4, 2013. REUTERS/Luke MacGregor

New car registrations surged 12.1 percent compared with a year ago to 403,136 units, the Society of Motor Manufacturers and Traders said on Friday.

That is the highest monthly level since March 2008, just before Britain plunged into its deepest recession in generations.

September is a key month for Britain’s auto industry as it marks a twice-yearly change in registration plates. Nonetheless, the trade body and analysts think the improvement is unlikely to tail off.

“As we head into the quieter months, I suspect we’ll see sales hold firm, keeping the UK market zooming ahead of our European counterparts,” said Richard Lowe, head of retail and wholesale at Barclays.

Solid car trade in Britain contrasts with a decline in Germany, Europe’s biggest car market, and the gap between the two is narrowing as a result.

So far this year, 1.79 million new cars have been sold in Britain, compared with 2.22 million in Germany. The latter was 6 percent fewer than at the same point last year.

Ford’s Fiesta claimed the top spot in Britain’s best-seller list in September, followed by General Motors-owned Vauxhall’s Corsa and Ford’s Focus, reflecting motorists’ budget-conscious approach.

Britain’s economy has shown signs of accelerating growth in recent months after several patchy years, with rising optimism unleashing pent-up consumer demand and boosting spending.

“This is the 19th consecutive month of steady growth (in car sales) and, with fleet and business demand still to reach pre-recession levels, we believe the performance to be sustainable,” said Mike Hawes, SMMT chief executive.

Sales of new cars in Britain have been supported this year by high fuel prices, low interest rates and compensation to victims of a banking scandal.

Reporting by Olesya Dmitracova, editing by Jeremy Gaunt

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