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September Car Registrations Down 8.9%

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Registrations of new cars in the UK had the second worst September since 1999, the Society of Motor Manufacturers and Traders said.

In what is traditionally one of the industry’s busiest months of the year because of the number plate changeover, registrations were 8.9 per cent lower than a year ago at 335,246 units, the car-industry lobby group said on Wednesday.

The SMMT attributed the fall to the end of scrappage incentives that stimulated car sales a year ago, and said it still expected Britain’s car market to end the year at 2m units, marginally higher than in 2009.

The group said its outlook remained cautious this year, with the government’s cost-cutting measures “likely to unsettle consumer and business confidence”.

“It is important that alongside government’s austerity measures, the comprehensive spending review signals a strong growth agenda to boost consumer and business confidence,” Paul Everitt, the SMMT’s chief executive, said in a statement.

The rise in value added tax due in January 2011, the SMMT added, could “modestly affect” car sales towards the end of the year.

September’s drop in car registrations was smaller than the 17.5 per cent year-on-year fall seen in August, which also reflected the withdrawal of the government-backed £2,000-per-car incentive in place a year ago.

Because the scrappage scheme artificially stimulated car sales, it is difficult to get a clear picture of underlying demand for cars – a leading consumer durable good – in the UK economy.

Sales to fleets, which cut back sharply on vehicle orders a year ago, were 6.7 per cent higher in September.

However, sales to private buyers – the main beneficiaries of scrappage – were 19 per cent lower than a year ago, the SMMT said.

David Raistrick, automotive partner at Deloitte, said the figures represented “disappointing news”. “Based on its performance so far this year, the new car market will be hard-pressed to exceed the 2m unit mark”, said Mr Raistrick.

However, he added: “We might see an increase in figures in the lead-up to the new year, as consumers look to purchase new cars before the VAT rate goes up on January 4”.

Global Insight economist Howard Archer said the numbers reflected “the serious pressure that households are under”. He added: “The sector faces difficult circumstances going forward.”

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The manufacturers (and dealers, especially s/h dealers) used the scrappage scheme as an opportunity to raise car prices. More castles in the air.

Weird thing but used car prices often rise even when new cars aren't shifting, even to the level that they are more expensive than new. Just a trend that often repeats itself.

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