Market dips to 12 year low

2008 sales slide by 11 per cent and fall below 2.2 million for first time since 1999 as downturn bites

DEALERS were warned last week they face a “difficult” future with vehicle registrations set to slide by up to 15 per cent in 2009.

The warning from the SMMT chief executive Paul Everitt came as its figures showed car registrations in 2008 fell 11.3 per cent to 2.1 million from 2.4 million the year before.

The fall came despite sustained efforts by the industry to shore up demand in the credit crunch with incentives and cut price deals. It was the lowest market since 1996 and the first time registrations fell below 2.2 million since 1999.

The year finished on a dismal note with December registrations down 21.2 per cent to 108,691 units, but it could have been worse. The SMMT had forecast that December sales would fall 35 per cent and last week it said registrations may have been stimulated in part by last month’s reduction in VAT.

Everitt said: “I fear the first quarter of 2009 will be a tough corner for dealers and we do not expect to see a great deal of improvement until the end of the year. We are looking at a market of 1.8 million or 1.9 million for 2009, a decline of 10 to 15 per cent.”

He added that manufacturers and dealers would be working to clear inventories and then to match supply to future demand.

Most brands saw their year-end totals down year-on-year with significant losses from mainstream players including Renault (-29.3 per cent), Honda (-21 per cent), Peugeot (-18.7 per cent) and Toyota (-10.8 per cent). Market leader Ford saw final year sales drop 7.6 per cent while Vauxhall, the second biggest seller, fell 9.8 per cent.

Pain was felt in the prestige sectors with Land Rover slumping by 30 per cent, Aston Martin by 28.5 per cent and Bentley by 26.5 per cent. Although Jaguar was one of the few brands to end the year on a positive note with sales up 8.7 per cent.

Other brands increasing sales included Volvo (up 11 per cent) and Kia (up 6.6 per cent).

Kia said it achieved the increase because of its Cee’d models, seven year warranty and growing dealer network.

Eric Wallbank, Ernst & Young’s UK head of automotive, said the dealers were one of the “biggest casualties” of the downturn. 

“The outlook for the automotive sector appears gloomy. 2008 saw an increasing number of failures of automotive suppliers and dealerships and it seems probable that there will be more casualties in 2009.”

The RMIF said the government needed to do more to boost demand for vehicle sales.

Meanwhile, registations of vans in the UK fell 26.6 per cent in December 2008 and 14.3 per cent year-on-year, according to SMMT figures.

? See page 9 for 2008 sales figures