Superminis the key to sustained growth in April

The car market continued to improve in April, growing above expectations with a 6,947 unit rise over last year's total. Registrations over the year-to-date period have grown by 26,217 units, according to the Society of Motor Manufacturers and Traders (SMMT).

However, April 2006 was a weak market, down 9.1 per cent compared to April 2005. The 2007 performance was also 12,863 units less than the 1999-2006 average for the month of 183,026 units.

Market up three times in past four months

The growth in April follows a better than expected first quarter performance and volumes have risen in three of the past four months.

The growth appears broad based – with private and fleet/business demand improving, despite fears over possible interest rate rises. New models and attractive offers are enticing motorists into showrooms.

SMMT has revised its full year forecast up to 2.335mn units, although this still suggests a modest fall in 2007.

Private demand continues to improve

Private demand rose for the third time this year in April. The 4.9 per cent rise was the strongest increase in private demand since March 2004. Since then private demand has only increased four times – three of those in 2007.

All sale types have seen growth over the first four months of the year. Business demand fell in April, but collectively fleet and business registrations have risen by 4.7 per cent over the first four months of 2007.

Superminis show best gain in April

Whilst the Ford Focus remained the top selling model in the UK in April and over the year-to-date, it was the supermini market that showed the best growth in the month.

Supermini registrations rose 11.3 per cent in April and were up 7.5 per cent over the year-to-date. Their volumes have grown by 19,906 units over the first four months of 2007.

Demand for diesel power continues to boom

Diesel car registrations rose for the third time this year and growth was again more than double the market average. Diesel penetration in April rose from 37.1 per cent last year to 39.0 per cent in 2007. Ford's Focus remained the best selling diesel model.

Diesel registrations have risen by 25,107 units over the first four months of the year and the full year forecast has been raised, with diesel penetration expected to average 40 per cent over 2007.

Economic analysis

Whilst the latest GDP figures for the first quarter of 2007 show a modest dip in growth, the pace, at 2.8 per cent was better than expected and growth prospects for the full year are robust at 2.7 per cent.

However, speculation of a further interest rate rise to curb the growth of inflation could unsettle consumer confidence. Inflation proved far stronger than expected in March and breached three per cent, prompting the governor of the Bank of England to write to the chancellor to explain why and how, the Bank was going to bring it down to two per cent.

'April has provided us with yet another boost to new car registrations, continuing the better than expected trend during the first quarter of 2007. Supermini growth of 11.3 per cent has helped to achieve this,' says Christopher Macgowan, chief executive of SMMT. 'Private demand rose too, but heightened speculation that further interest rate rises are on the horizon may tame this performance.'