Escalating interest rates present a major threat to record UK new car sales according to Society of Motor Manufacturers and Traders president Tod Evans.
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He said: “There is a huge risk to market growth from increased interest rates.
“Thankfully at present the [Bank of England’s] monetary policy committee is carefully edging up rates at one quarter of a per cent each time to manipulate a soft landing for a pretty hot economy. But if there is a ratcheting up and the housing market peaks and falls back it will have a dramatic effect particularly on big ticket item spending like cars.”
Evans did not rate higher fuel prices as an imminent threat to showroom business and said: “If people want to drive from A to B they will use the most effective means available which is the car, new or used.”
Referring to a market, which he claimed: “logically should not be growing” Evans said it was based on a stable confident economy, cheap finance and resulted in being able to buy new cars on repayment terms which are similar to deals done three years ago. These factors overcame the increasing reliability of cars and three year warranties which might be expected to suppress demand.
