Taxing times for the UK motorist

New car demand slowed for a second successive month in February, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

In each of the past three years February has been the lowest volume month and since 1999 has accounted for only 3.4% of annual registrations.

New car demand over the first two months of the year has fallen by 3.1%. However, over a rolling six and 12 month period registrations stay up.

March market to show further dip

The new car market is expected to slip to 2.345mn units in 2008. A significant proportion of this fall is expected to take place in the month of March, which was particularly buoyant in 2007.

March is the largest volume month and in 2007 accounted for 18.7% of annual demand. Volumes this year are expected to slip to 425,000 units, down 5.4% or almost 25,000 units.

Caution over the economic setting remains, despite the modest cut in interest rates in February.

Private market share shows growth

The private sector reported a modest net gain in market share in February, moving from 32.9% in 2007 to 33.3%. However, the volumes still declined and were down on a subdued 2007 performance.

Fleet and business volumes also fell in February and were down over the year-to-date.

Astra heads February sales

The Vauxhall Astra took the top spot in February, pushing the Focus into second place. Vauxhall was also the UK's best selling marque in the month. It had four of the top ten best selling models.

The MPV and upper medium segments grew during February.

BMW, Kia, Nissan, Skoda, and Volvo were among the brands that did well in the month.

Diesel market continues to climb

Diesel registrations posted a fifth successive month of double digit growth and were the best ever February figures.

VW's Golf was the best selling model in both the month and year-to-date.

Demand for alternatively fuelled cars also rose strongly in the month, up 21.4%, to boost volumes to 1,654 units over the year-to-date.

Economic analysis

The UK economy is set to cool in 2008. Consumer confidence will be bolstered by high employment, but the recent decline in house prices and concerns over the readiness of cheap credit are beginning to bite. Data from Nationwide show how prices have fallen and the rate of annual growth has fallen to under 3%.

The Budget on March 12th will need to be uplifting to sustain economic growth. SMMT hope the motorist will not be targeted, behind a smokescreen of ‘environmental taxes’, as a revenue raising source.

Paul Everitt, SMMT chief executive, said: “New car registrations fell in February in line with market expectations. It is important that the chancellor uses next week's budget to help boost consumer confidence and avoids disruptive or disproportionate changes to vehicle and fuel taxation.”