UK new car registrations fell 17.5% in August to 55,305 units compared with scrappage scheme-fuelled August 2009. August is also a slow month ahead of the twice-yearly registration plate change on 1 September.

The Society of Motor Manufacturers and Traders (SMMT) said the decline marked the second consecutive monthly fall, a pattern it expected to continue through to the end of the year.

Volumes, however, is up 13.2% to date against last year, at 1,300,413 units and the SMMT's lates full year forecast suggests 2010 registrations will finish at 2m, up 1.2% on 2009.

“New car registrations were down 17.5% in August and conditions will remain challenging through the rest of the year," said CEO Paul Everitt. “The industry enjoyed a better than expected first half of the year and, despite the difficulties, SMMT is forecasting that new car registrations will close just ahead of 2009 figures.”

 

August will be the lowest volume month of 2010 and the month typically only accounts for 3.3% of annual sales ahead of the plate change in September. Last August over 16,000 cars or 25% of the market were registered through the scrappage scheme.

The market for new ‘60’ plate cars is expected to decline by around 10% in September, from 367,929 units last year. The market is forecast to slow from the current annual running rate of 2.146m units to 2.018m units by the end of the year.

Diesel-fuelled cars once again saw their market share reach a new high, of 52.6% in the month, in part reflecting the drop in petrol-fuelled car registrations.

Year to date, the supermini and lower medium segment markets have contributed the largest volume to the market’s growth, but they, along with the mini segment, recorded a sharp decline in August volumes. MPV, dual-purpose (SUV), executive and luxury saloon segments have sustained their strong growth momentum.

The Ford Fiesta was the best selling model in August and for the year to date, followed by the Focus and GM's Vauxhall Astra and Corsa.

 

"Private sales are likely to be limited appreciably by the serious pressures facing households. These pressures will make consumers' very careful about splashing out on as big-ticket an item as a car," Howard Archer, economist with IHS Global Insight, told Reuters.

"The substantial fiscal squeeze will increasingly hit public sector jobs and consumers' pockets, while households already face high unemployment, muted earnings growth, elevated debt levels and high fuel prices," he added.

"It is likely, though, that some car sales could be brought forward in the latter months of 2010 from 2011 as purchasers look to beat value added tax (VAT) rising up from 17.5% to 20% in January."