“Bangers for Cash” Slows Falling UK Car Sales

While it seems that nothing short of a miraculous jump in car sales would persuade some that the UK government’s scrappage scheme could be described as a success, June’s new car registrations have shown that there has at least been some positive impact from the action taken, with the figure continuing to fall, but at its lowest rate in 12 months. 176,264 new cars were registered in the month, meaning a fall of 15.7 per cent in comparison with last year’s sixth month; a figure which may leave some perplexed as to why this is such a positive sign. However, there is a strong case for adding the word “only” to the beginning of that figure, seeing as this is the lowest dip into negative figures since July 2008 and that year-to-date demand has fallen proportionally two-thirds as much again, at 25.9 per cent. Therefore it would be churlish to say the scheme has had negligible impact, especially since this slowing of the downward spiral has taken into account only the first few weeks of the scheme’s inception.

Indeed, examining at the figures in comparison with projections for the month – which did not take into account the scheme – things begin to look even better. The Society of Motor Manufacturers and Traders suggested in April that the market in June would decline to 153,000 units, meaning that the actuality represents an improvement of 15 per cent. Checking in on certain segments also paints a somewhat rosier picture, especially in the private buyers market, where the figures rose for the first time since November 2007, up by 3.9 per cent – figures that are somewhat dampened by the business segment, which fell more than in May in ’08-’09 comparisons, deep into the mid-thirties, percentage-wise. Fleet sales fell by less than May, though with that fall still in the late-twenties month-on-month, it would be foolish to call this a recovery.

However, Paul Everitt, the chief executive of the SMMT, was keen to look at the positive impact undoubtedly made by the scrappage scheme, predicting more for upcoming months: “We are now beginning to see the positive impact of the scrappage scheme translate into new vehicle registrations. SMMT expects the pace of improvement to increase in the coming months, but we can already see the industry making steady progress on the long road to recovery.”

The good news should be echoed by manufacturers of smaller cars. The mini segment of the market grew in June by 145.4 per cent and superminis stormed ahead – at least proportionally – with a 37.2 per cent share of the market; more than ever before. Ford’s Fiesta scored 9,822 sales in the month, with the Focus not far behind on 9,286 – both cars top year-to-date sales tables too, and the Fiesta has been top-seller for five out of the six months tallied so far. Other small cars to achieve top ten status include Vauxhall’s Corsa and Astra, Peugeot’s 207, the MINI and the Volkswagen Gold (in that order). The rest of the top ten was rounded out by larger cars – the Ford Mondeo, the Vauxhall Insignia and the BMW 3 Series. The rise of the smaller car in June also meant a slight drop in market penetration for diesel-powered vehicles compared to last year, taking 42.3 per cent of the market, as opposed to 42.8 in June ’08.

In terms of cars sold through the scrappage scheme in June, there was a notable success for Hyundai (3,042 vehicles sold), who outstripped arguably bigger UK names such as Ford (2,066), Toyota (2,586) and Fiat (1,743). In total 29,796 vehicles have been sold through the scheme.

While the government was criticised in some quarters for not building into the scheme a true ecological agenda – the scheme effectively gives free reign to the buyer to decide whether to go green or not – the SMMT says that the average new car carbon dioxide emissions have been driven down to a new average low in the first half of 2009, reaching the figure of 152.3g/km. This is 3.6 per cent less than 158.0g/km, as recorded in 2008 and 19.8 per cent below that of 1997.