Car sales in the UK fell last year with the Society of Motor Manufacturers and Traders (SMMT) saying rising living costs had hit potential buyers.
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“Demand for discretionary items, such as new cars, has been dented by increases in basic costs such as utility bills and taxes. 2006 also saw a sharp rise in inflation… which led to a rise in base [interest] rates, this in turn has increased debt levels further,” the SMMT said as it announced the results.
Sales of 2,344,864 units, down 3.9%, were “in line with expectations” and no improvement was seen for this year.
“The outlook is for a further modest softening in 2007, as the squeeze on consumer and government spending looks set to offer little additional encouragement to the new car buyer,” the SMMT said.
December sales plummeted 14.7% to 133,810 vehicles compared with December 2005 but the trade group said previous-year volume was boosted by a rise in diesel registrations due to pending company car tax rule changes.
Diesel registrations rose 0.1% to a record 898,521 units last year.
“2006 was by no means an easy year for the motor industry and the fall in new car registrations comes as no surprise. Uncertainty, fuelled by factors like interest rate rises, political instability and fuel price fluctuations conspired to make the market place a difficult one,” said SMMT chief executive Christopher Macgowan.
“Although we can expect another tough 12 months ahead, that is not to say that it is all doom and gloom – 2007 promises a host of new models along with the potential for attractive showroom offers to tempt the buyer.”
Ford’s Focus was the UK’s top-selling model in 2006, followed by GM’s rival Vauxhall (Opel) Astra and the smaller Ford Fiesta.
The Focus was also the top-selling diesel, followed by the VW Passat and Ford’s Mondeo.
