Car buyers put the brakes on 2005

Car sales in the UK dropped by 5% last year to fewer than 2.5 million, according to the Society of Motor Manufacturers and Traders (SMMT).

‘This is the first time since 2001 that sales have fallen below 2.5 million,’ said Sue Robinson, franchised dealer director of the Retail Motor Industry Federation (RMIF), commenting on figures released today which show that 2,439,717 units were sold in 2005, down 5 per cent on 2004.

She added: ‘The decline in the market is not insignificant. Retailers say the main reason seems to be nervousness on the part of the consumer: the fall is mainly from private buyers. This mirrors the high street experience over the past few months - interest rate rises in 2004, increasing taxation and a general feeling of insecurity are all playing a major part.

‘Some good news is that December shows record registrations of 156,866 units, up 8.7 per cent on 2004, with diesel registrations rising a massive 40.6 per cent. These are hopeful signs that the industry can continue to hold its nerve - despite tough trading conditions - over the coming year.’

She ended: ‘Overall, putting the figures into context, 2006 is unlikely to fall below the two million mark, which is seen as a watershed. It should also be noted that the UK remains the second largest market in Europe.’