Upturn around the corner?

OPTIMISIM, albeit cautious, is on the horizon for new and used car sales next year, reports EurotaxGlass’s.

Despite the UK entering a recession, the Glass’s Guide publisher feels a recovery for markets is around the corner. And it could just be a foretaste of an improvement in the general recession-hit UK’s fortunes.

Used cars will be the first to see an upturn, followed by a modest improvement in retail new car sales.

However, the fleet market is set to remain depressed until this time next year – at the very least.

‘In the short term, conditions will remain difficult for car dealers, reinforced by the usual seasonal decline in demand that accompanies the latter months of the year,’ explains Adrian Rushmore, Managing Editor at EurotaxGlass’s.

But he believes this summer’s dramatic downturn was very much a one-off. ’The arrival of the ‘09’-plate next March will clearly be an acid test for both new and used sales, and analysis of the current market indicators suggests there are reasons for cautious optimism.’

There are several reasons for this, he says. ‘Economists are agreed that the inflation rate has probably peaked, and that by the middle of next year, the economy will be almost inflation-free. In the short term, this move will be helped by declining fuel prices and further falls in the Bank of England base interest rate, making a tangible difference to consumer’s household finances.

‘As these pieces of good news are drip-fed into news bulletins, it is quite possible that the knock-on effect will be to inject a little buying enthusiasm into the minds of consumers by the first quarter of next year.’

Don’t forget, too, all those people who would have bought a car, but have put it off. ‘There could be some limited release of pent-up demand helped by a realisation that prices will be at an all-time low.’

But Rushmore is less positive about the fortunes of the fleet sector. ‘Companies are feeling the financial squeeze and, once they make policy decisions around their business activities, they tend not to reverse them very quickly. This has obvious implications for corporate fleet sales.

‘Given this situation, it is very difficult to see fleet sales improving in the foreseeable future. This means that those car manufacturers that rely heavily on fleet sales will continue to find trading conditions particularly challenging.’