Forecourts hit as new car sales decline 5% in 2005 |
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Published
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Sat, 31 Dec 2005 20:05
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LONDON: New car sales during 2005 declined to a 11-year low after 2004’s high of 2.56 million, according to new data.
The Society of Motor Manufacturers and Traders (SMMT) yesterday said the passing year had seen a sale of 2.43 million new car sales down 5 percent from 2004’s new car sales figures. The 5 percent drop is the lowest since 1994 sales.
It is the first time since 2001 that new car sales have dropped below 2.5 million. The decline follows two years of growth ending with “fantastically high level of car sales in 2004” as an automotive expert called it ‘unsustainable high’. The rate of decline is said to be the fastest for more than 11 years.
The drop in sales could suggest the market was levelling out in 2005 but it “still makes the UK market one of the biggest in the world" according to Prof Garel Rhys who heads Cardiff Business School’s automotive industry research centre. The professor agrees that 5 percent dip in sales is “very considerable and significant”.
Although the SMMT spokesman said the industry has nothing to worry about, the decline is certain to reflect in the bottom line of car dealers.
Analysts said it was the result of the many hikes in borrowing rate announced by the Bank of England in 2004 and the first half of 2005. A further 2.5 percent decline in new car sales next year would be quite normal and is only to be expected, the SMMT spokesman said.
Prof Rhys explained the decline as an indication the consumer was being cautious. He too felt new car sales would decline a further 2 percent in 2006 but suggest a possibility the trend would reverse in 2007.
The SMMT’s full statistics will be published next week.
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UK car market declines despite surge in diesel cars sale 