New car registration growth sustained in solid June

New car registrations rose by 1.5 per cent in June to post the fourth monthly increase of the year and ensure growth continues on both a three and six month-to-date basis, according to the Society of Motor Manufacturer and Traders (SMMT).

Registrations over the first half of the year have risen by 25,378 units or 2.0 per cent.

The June 2007 total was almost 8,000 units above SMMT's forecast level, and was over 5,000 or 2.5 per cent above the 1999-2006 average for the month of 217,354 units.

Market remains on target for 2.335mn units

The market has picked up over the past six months and the 12 month rolling total has now moved to above 2.37mn units.

Concerns remain, however, that interest rates will rise further this year – possibly at today's Bank of England meeting. GDP growth and consumer spending has been resilient, but the effects of higher base rates will impact and are expected to offset the enticing deals and offers in showrooms in the second half of the year. SMMT is due to review its full year forecast later this month. It currently stands at 2.335mn units.

All sales types remain positive

Private demand has risen in four of the first six months of the year, although net growth has only been marginal at 0.9 per cent. Demand in June rose by over double that rate but at two per cent was still modest.

Fleet/business demand has collectively improved by three per cent over the first half of the year and their share of the market has risen from 54.9 per cent a year ago to 55.4 per cent.

Vauxhall Astra takes top spot in June

The Vauxhall Astra was the best selling model in June, for the first time since November 1998. The Ford Focus was knocked off the number one best seller's slot for the first time since September last year and for only the fourth time since May 2000.

Most segments posted growth in June. Over the first half of the year the supermini market has shown the best volume gain, up by 20,763 units or 5.3 per cent.

Diesels market up 5.9 per cent in first half

The diesel-engined registrations only edged upwards in June and their market share slipped marginally from 38.9 in June last year to 38.4 per cent.

Over the first half of the year the market was still up 5.9 per cent, or 27,516 units and its market share rose to 38.7 per cent compared with 37.3 per cent a year ago.

The Focus remains the best selling diesel model over the first half of the year, but BMW's 3-series took the top spot in June.

Economic analysis

There was growth in consumer spending during the first quarter of 2007, which at 2.9 per cent was the strongest since Q4 2004.

The falling savings ratio and higher debts to earnings ratios suggest that consumers are maintaining spending through finance or eating into their savings.

Concerns remain over the durability of this spending, especially as interest rate rises begin to bite. Rising base rates are also strengthening the pound, which is now trading at over $2, which will make conditions harder for British exporters.

'At the half point of the year, June is traditionally the time to take stock of one's performance – and so far in 2007, things look encouraging,' says Christopher Macgowan, chief executive of SMMT. 'However, while total new car registrations for the first six months are up on the previous year, they are still below the average since we moved to the twice-yearly plate change. Cost-conscious motorists will surely have one eye on the showroom and the other on the Bank of England's rate announcement.'