Diesel volumes surge, despite overall weaker demand in January

New car registrations got off to a slow start in 2008, falling by 2.1 per cent or 3,506 units, according to the Society of Motor Manufacturers & Traders (SMMT).

Dual purpose (4x4), executive, mini and MPV segments all posted growth in January, up 7.6, 14.3, 16.4, and 20.8 per cent respectively. Alternatively fuelled vehicles registrations were up 14.4 per cent to 1,280 units for the month.

Lower medium vehicles saw the largest volume increase of 1,860 units or 3.7 per cent.

Decline still expected in 2008

Registrations steadily increased in 2007, bettering expectations particularly in the final quarter.
However, a decline to 2.345 million units is now expected over 2007 figures.

Concerns remain over spending and confidence impact from the global credit crunch. The Bank of England is widely expected to follow the US Federal Reserve's lead and cut interest rates this week in an effort to support growth. However, most forecasts suggest GDP will slow to near two per cent this year, from over three per cent in 2007.

Fleet sales hold par in January 2008

January is traditionally a good month for fleet sales, and the segment was up 0.2 per cent compared to January 2007, and took the largest share of the market at 56.1 per cent.

Private and business registrations start 2008 on a slightly weaker note, down 5.3 and 3.1 per cent respectively. The fall in private sales is one of the main contributors to the dip in January's total.

Focus still top seller in January 2008

The top 10 accounts for a third of January's sales with the Ford Focus setting a firm hold on the top slot and confirming its nine year run at the top.

Ford and Vauxhall remain the UK's top selling marques, while Audi, BMW, Mercedes and Nissan all recorded significant growth.

VW's Golf was the best selling diesel, just ahead the Ford Focus.

Diesel demand continues to drive forward

While the total market slipped in January, diesel registrations jumped a further 10 per cent. Diesels accounted for 44.9 per cent of the January total, a record for the month and the second highest-ever share.

Total registrations are expected to soften in 2008, but high fuel costs will see fuel efficiency a key consideration for new car buyers. This, and action on CO2 emissions, should mean that diesels' market share will grow further.

Economic analysis

The Bank of England is expected to cut base interest rates on Thursday 7 February when the MPC meets.

The US Fed has cut interest rates by 1.25 percentage points in the space of a month, to three per cent in an effort to stave of recession and restore confidence in the US.

Inflationary pressures and expectations are a concern with food, energy and transport costs rising. Abruptly weaker spending growth is seen as more of a priority; cuts in the base rate are expected to aid GDP growth in 2008.

Paul Everitt, SMMT chief executive, commented: “We expect a modest fall in registrations this year, and a 2.1 per cent dip in January is in line with expectations.

”Fuel efficiency is a high priority for customers and it is encouraging to see that nearly half of the market is diesel. The 4x4 and MPV segments saw an increase in volumes over January 2007, and are segment leaders in reducing tailpipe CO2, with drops of 20 and 24 per cent respectively between 1997 and 2007.”