New car sales grew by 26.4 per cent in February this year, compared to the same month of 2009, the latest data from the Society of Motor Manufacturers and Traders (SMMT) has revealed.
A total of 68,686 new cars were registered in the month as the industry, with private sales driving the growth in sales. As the scrappage scheme entered its final months, car buyers continued to place orders through the scheme before the last available grants were divided up among the participating carmakers. The scheme accounted for a total of 19.6 per cent of the February new car market.
It was the eighth successive month that the market showed growth, rising on weak demand in the early part of 2009. Business demand for new cars also appears to have rallied as the market headed towards the key month of March when the new ‘10’ plate became available. According to the society business sales grew 9.6 per cent in February to 2,348 new cars while fleet grew by 4.3 per cent to 35,540 vehicles.
“Scrappage has generated eight consecutive months of growth in the new car market and we expect its benefits to stretch beyond the scheme’s closure later this month,” said SMMT chief executive, Paul Everitt.
However the car industry is bracing itself for a reduced market for new cars as the scrappage scheme closes at the end of this month, just as new ‘showroom taxes’ are introduced on April 1, 2010. The showroom taxes will see higher CO2 emitting vehicles pay a higher rate of first year road tax as a incentive to choose lower emitting cars. While the scrappage scheme is expected to boost new car registrations for a few months after it is gone, due to waiting times on deliveries, the society is predicting a market decline in the second half of 2010.
The Government is also considering introducing a higher VAT rate of 20 per cent when the Budget is released this month, which would push the cost of buying a new car even higher. The society has warned the Government that such a month could be disastrous to a delicate market.
“Industry continues to face challenging market conditions, but positive trends in the fleet and business sectors suggest that negative impacts can be minimised. Strengthening business and consumer confidence remains industry’s priority. A clear and consistent approach to CO2 based taxation and improved access to affordable credit are essential elements in sustaining recovery in the new car market,” concludes. Everitt.
The automotive industry is a vital part of the UK economy with £51 billion turnover and £10 billion value added. With over 800,000 jobs dependent on the industry, it accounts for 10 per cent of total UK exports.