GOVERNMENT spending cuts was the reason for October’s slump in new car sales says the RMI.
Yesterday the SMMT released figures which revealed that new cars were down 22.2 per cent in October – the worst figures since May 2009.
Concerns amongst buyers about Government spending cuts and the economy in gerneral were the reasons, says the RMI’s franchised director, Sue Robinson.
‘The continued media coverage of Government spending cuts, and their effect on the public purse, raised consumer concerns, with buyers waiting to ascertain the full effects of the cuts on their personal budgets before committing to large ticket purchases.
‘Despite reports of a slight recovery in the economy the threat of increased university fees, removal of child benefits and the rise in petrol prices have all contributed to a more cautious consumer, who favours a car with high miles per gallon, and affordable servicing.
‘Notably, diesel car sales reached their best ever monthly market share of 54.7% and year-to-date share of 45.3%.’ said Robinson.
January’s VAT rise was expected to lift the market, but the potential 2.5 per cent saving has been negated by the Government’s tough budget.
However, the news is not all that bad if October 2010 is compared to the same month last year.
On a like-for -like basis, if scrappage figures are omitted, 2010’s figures are the same as 2009’s.
‘Porsche, Bentley and BMW all reported increased sales compared to 2009, the cost of 2.5 per cent VAT increase will have a significant effect on the price of such vehicles, and, with interest rates low those who can afford to are well advised to spend rather than save,’ added Robinson.
by JAMES BATCHELOR