A cautious approach to spending by consumers dented sales of new cars in October, which were down 22.2% on 2009.
“The continued media coverage of Government spending cuts, and their effect on the public purse, raised consumer concerns, with buyers waiting to ascertain the full effects of the cuts on their personal budgets before committing to large ticket purchases” said Sue Robinson, Retail Motor Industry Franchised Director.
“Despite reports of a slight recovery in the economy the threat of increased university fees, removal of child benefits and the rise in petrol prices have all contributed to a more cautious consumer, who favours a car with high miles per gallon, and affordable servicing. Notably, diesel car sales reached their best ever monthly market share of 54.7% and year-to-date share of 45.3%.” continued Robinson.
The VAT rise in January was expected to lift the market towards the end of this year but the potential 2.5% saving appears to have been counteracted by the coalition’s tough budget action.
However, even with consumers becoming increasingly frugal, comparing October 2010 with October 2009, on a like for like basis with the omission of the scrappage incentivised sales, figures are the same. “Porsche, Bentley and BMW all reported increased sales compared to 2009, the cost of 2.5% VAT increase will have a significant effect on the price of such vehicles, and, with interest rates low those who can afford to are well advised to spend rather than save” concluded Robinson.