Diesel registrations motor on during quiet May

Registrations dipped by 2.2 per cent or 4,205 units in May, according to the Society of Motor Manufacturers and Traders (SMMT). The May market, however, was in line with SMMT's forecast for the month.

May's dip does curtail a run of two months growth, but marked only the second decline of 2007 and year-to-date volumes remained up 22,012 units or 2.2 per cent.

The May figure was 7,921 units or 4.1 per cent off the 1999-2006 average for the month of 193,718 units. It was also the lowest May volume since 1999 and well below the 2002 peak of 208,669 units.

Market remains on target for 2.335mn units

The market currently remains on track to achieve the full year forecast of 2.335mn units.

The 12 month rolling total currently stands at 2.367mn units – over 30,000 units above the full year forecast.

The rise in interest rates in May and speculation that rates may further rise remains a concern for future demand. However, increasingly attractive products and enticing deals are likely to remain an enduring feature of the new car market.

All sales types categories remain up over YTD

Over the first five months of 2007 all sales type categories continued to report growth, despite the slowdown in May.

Both private and fleet demand fell in May, whilst business demand rose by 4.4 per cent – on top of a 19.2 per cent rise a year ago.

So far in 2007, fleet demand remains the driver for growth, but private registrations were up for the year by 2,970 units, despite a weak performance in May.

Multi Purpose Vehicle market surges in May

The practicality and adaptability of MPVs has helped the segment volume more than double since 2000. In May the MPV market jumped a further 21.1 per cent as new models, largely from Ford, bore fruit. Vauxhall's Zafira still dominates the segment, and just missed out on a top 10 slot.

The Focus headed the overall best sellers list, once again. But most segments, including the lower medium sector where the Focus resides, saw volumes decline in May. The popular supermini segment remained up 5.8 per cent over the year-to-date, with 341,814 units.

Diesel power continues to sell

Despite a modest cooling of the overall market in May, registrations of diesel cars continued to motor forwards. Their market rose two percentage points compared to last May, reaching 39.9 per cent for the month.

Diesel registrations over the first five months of 2007 have risen by 7.2 per cent or 27,181 units. The Ford Focus remains the best selling diesel model for both the month and year-to-date.

Economic analysis

In May, interest rates rose for the fourth time since August, to 5.5 per cent. A further quarter point rise has been widely tipped to be announced at tomorrow's Bank of England meeting, aimed at curbing inflation.

Higher base rates knock consumers' willingness and ability to maintain spending patterns, let alone increase their spending.

Recent data from the British Retail Consortium suggests retail sales are slowing in response to past rate rises.

'The ever-frugal motorist has helped limit climate change through reduced tailpipe emissions by purchasing more cars with fuel-efficient diesel engines,' says Christopher Macgowan, chief executive of SMMT. 'Ipsos MORI research commissioned by SMMT, Women and motoring, indicates that the environment is gradually becoming more of a hot topic for new car buyers – especially with the younger motorist. Hopefully, campaigns such as Act on CO2, will make more motorists aware of both the cost, and climate change advantages, of modern, cleaner engine technology.'