UK new car registrations fell 23.0% last month to 128,352 units, the Society of Motor Manufacturers and Traders said on Thursday.
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Year to date volume was down 8.8% to 1,922,771 units.
Diesel vehicles’ market share rose to a record high of 45.6% in October.
The SMMT has revised its 2008 forecast to 2.15m vehicles.
“October has proved another difficult month for the UK motor industry and action is needed to help restore consumer confidence and encourage buyers back to the showrooms,” said SMMT chief executive Paul Everitt.
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By GlobalData“Cuts in interest rates that are swiftly passed on to consumers, scrapping planned increases in VED [the UK’s annual tax on road vehicles] and maintaining public expenditure on new vehicles are essential parts of the package required by industry.
“There is also a clear role for European action to support continued investment in new, lower carbon vehicle technologies.”
“October proved to be another challenging month for car dealers, as consumers continued to be cautious about spending,” added Sue Robinson, director of the RMI National Franchised Dealers Association (NFDA), which represents UK car retailers.
Robinson’s view is similar to Everitt’s: “The next few months could remain difficult if the government does not make moves to help the consumer, and business. While interest rates are falling, and will in time feed through to businesses and consumers, there are a number of other measures including tax reductions that the government could undertake to assist the economy.”
Robinson called the Bank of England’s Thursday decision to slash the UK’s interest rate from 4.5% to 3% “positive news for consumers and business, but it is vital that the saving is passed on to restore confidence in the marketplace.”
“Consumers and business will feel more confident in the economy once they feel the effect of a lower cost of borrowing.”
David Raistrick, UK manufacturing industry head at Deloitte, said: “Today’s new car sales data adds further worrying news to a sector already facing significant challenges. This is the sixth consecutive month of falling car registrations and the short term outlook for the automotive industry is gloomy, especially in Europe, Japan and the USA.
“The reduced availability of finance following the credit crunch means that [automakers] are challenged in financing their daily operations, and in the longer term, sustaining the level of investment required in the transition towards low emission vehicles.
“Consumer confidence remains the big stumbling block with slowing demand for new cars in major markets as consumers adjust to deteriorating economic circumstances. Until consumer confidence improves, car sales are likely to remain stagnant.
“The entire automotive supply chain is facing unprecedented pressure. It is a period of turmoil in the sector with tier 1 and tier 2 suppliers suffering falling orders, [automakers] with decreasing sales and reduced forecasts, retailers with a significant drop in both new and used car sales, and vehicle leasing operations suffering as residual values collapse
“Consumers are being squeezed from all angles, finding it more difficult to source car finance at affordable rates. A number of banks are now restricting the supply of car loans or charging increasing rates to borrowers. Leasing offers are becoming less attractive in the current climate and car taxation changes are also working against the consumer in some cases. With the near-term economic outlook bleak, compounded by talk of recession and job cuts, affordability issues are likely to limit car sales until the economy begins to pick up again.
“But if you believe you might pick up a bargain, think again. There is mixed feeling in the industry about the use of consumer incentives with many arguing that consumer incentives erode resale values, tarnish brands and condition consumers to hold out for the next big deal. Discounts also carry a risk of pulling consumers into the market before they would naturally buy a vehicle, depressing future demand.
“The only bright spot in the gloom is today’s decision to cut interest rates by 1.5%. Whilst this will alleviate some of the pressure facing the sector and is clearly to be welcomed, the ultimate health of the sector is dependant on the recovery of demand, and return of consumer confidence.”
