Car dealers struggle in weak October new car market

The October new car market fell by 18,369 units, marking the tenth decline in registrations this year.

The 2005 performance was also 10.7 per cent below the average October level between 1999 and 2004.

The decline partly reflects the situation in the wider economy, where consumer spending has been hit by interest rises and soaring fuel prices.

Private sector remains depressed

Both the private and fleet sector fell in October. However, it was the private sector which reported the larger fall.

Volumes sold to private buyers fell by 11,081 units in October and by 109,029 units over the year-to-date. Over the first 10 months of 2005 their market share has fallen to 45.0 per cent, from 47.3 per cent a year ago.

Weaker market dampens confidence

New car volumes over the year-to-date have fallen by 5.6 per cent and the full year forecast now stands at 2.435 million units.

UK-built cars recorded an 18.8 per cent fall in October volumes compared with last year. Market share stands at 16.2 per cent in the month and 17.4 per cent over the year-to-date.

MG Rover volumes fell by over 80 per cent in October and nearer 60 per cent over the year-to-date. Of the October fall, 21 per cent was due to MG Rover - over the year-to-date, it represented 37 per cent of the market decline.

Supermini volumes slide, but new models due

October saw a further fall in supermini volumes, down 17.5 per cent in the month and 12.2 per cent over the year-to-date. The Renault Clio and Fiat Punto saw some of the sharpest falls, although new versions of both are due to be launched in the next few months.

The Ford Focus remains the UK's number one best-selling model. The Vauxhall Astra and Renault Mégane in second and third spots mean all of the top three places in October were lower medium cars.

Diesel volumes fall, but hit record penetration

Diesel penetration reached a record level of 39.9 per cent in the October despite the first fall in volumes in 61 months. Volumes fell 4.2 per cent to 60,867 units. The previous market share record was exactly 12 months ago when October 2004 levels reached 37.2 per cent.

The Ford Focus was the best selling diesel model for the fourth successive month and is just 919 units behind the Ford Mondeo's total over the year-to-date.

Weaker GDP growth to hinder car sales

The new car market is set to ease to 2.435 million units this year, 5.2 per cent down from last year's level. The market would still be on par with the 1999-2004 average and would be the fifth highest ever annual total.

The UK economy has performed well below expectations, with consumer spending falling consistently from the end of 2004. Gross Domestic Product growth is expected to ease further in 2006, which could further weaken new car demand.

Diesel volumes are expected to continue to rise, however, with market share set to pass 37 per cent in 2006. A further increase is likely in 2007.

“2005 has been a tough year for the new car market,” commented SMMT chief executive Christopher Macgowan. “The downturn in consumer spending has hit dealerships across the country. The good news for buyers is that a weak market means strong deals. The next few months will also see a range of new models, especially in the popular supermini segment. Manufacturers and dealers will continue to fight hard for every sale.”