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New car registrations in the UK fell yet again in February, with the market down nearly 22 per cent year on year.

Although the month’s sales figures were slightly above expectations, the Society of Motor Manufacturers and Traders (SMMT) warned that urgent government action was still needed to slow the decline.

“Other European countries have been proactive in assisting their automotive industries,” said Paul Everitt, SMMT chief executive. “It is imperative that UK government increas...Read the full article

Couple of points. First, only one of the top ten best selling cars in UK is made(possibly) in the UK, the Astra, which combined with the fact that scrapping schemes, as advocated by the SMMT, skew the market for new cars even further to the smallest, cheapest cars, means that having such a scheme in UK would mean little or nil benefit to UK based car producers.

Second, given the increase in small car sales Vauxhall's Insignia gaining 6th place in Feb's best seller listing is quite something. And lastly and most importantly given that the Bank of England and this out of control government have just begun printing hundreds of billions of pounds of 'free' money any talk from the SMMT of 'incentives' to new car purchase in Britain becomes instantly redundant and laughable. If such a thing as printed money could work then the troubles of SMMT, car dealers and producers are instantly over and no scheme like scrapping incentives is needed. But printing billions and billions of pounds of money doesn't work does it. Get ready for a final collapse in the British pound and car buying at Icelandic levels post that country's currency crash, i.e. next to nothing. Congratulations City of London Masters of the Universe you've just consigned Britain to the wastebin.  

Results of first three months of scrappage scheme in Spain - err, 50 cars sold

Agreed on most!^^ H&C is right, here the scapage scheme or access to credit for consumers or the businesses will not work; firstly, if the consumers are not buying cars then they are not buying cars and secondly if they are not buying cars they are not going to want credit and thirdly if they are not buying cars and the dealers want credit that then subsidies the manufacturers (overseas owned) and they stock pile cars etc......in the present circumstances people are not wanting to be saddled by extra debt and thus credit ofr consumers is not the way to go for car purchases.

Also as H&C points out this will not help any UK owned businesses particually; so its SMMT should think again.....how about reducing the prices of cars to sell more as someone else mentioned on a forum re. LDV vans (from memory).

For printing money, I do not (I could be wrong H&C and if so I apologise).....but I do not think they are actually printing money...is it not to do with bonds or something.

 Ps; I think the UK economy will start and get better...the HSBC thing is going to be rough for them (I personally think) and the affects in the wider markets might be a bit rough.....but the UK economy will get better....I can see things growing, as I have said before you are going to see lots of new companies coming through and different sectors growing etc.....2009 will start and see improvements for sure......we are not even near the waste basket yet...the UK has a really bright future......and people should not be scared, confidence is starting to return...(people are starting to look for investments etc)....not in spades, but in sectors I can see things are starting to move...which is good.

Having looked at SMMT's figures for commercial vehicle registrations the real story for February overall is the massive decline in van and truck sales. Car sales as we know are minimal in Feb, at less than 5% of annual sales, so any movement, small or large, can be somewhat discounted but commercial sales are less driven by reg. plate changes and more by financial year budgets, which should aid sales ordinarily in the run up to April.

Commercial registrations were down a massive 51% in Feb against Feb 08: trucks down 42% and vans 58%. This time last year the running rate for van and truck sales in the UK was just shy of 400,000 units a year. Now it looks like 150,000 for 2009 would be a result, with only 24,000 registered year to date. This is the real news and no amount of bleating from SMMT and its pet scrappage scheme can affect it or hide the collapse of the real economy reflected in purchasing(or lack of) of commercial vehicles.

Only 118 LDV vehicles were registered in UK in Feb against 432 in Feb 08.

North:

For printing money, I do not (I could be wrong H&C and if so I apologise).....but I do not think they are actually printing money...is it not to do with bonds or something.

Sorry North, yes they are - printing. Of course not physical printing, after all that would require some real money for the cost of the paper/rag, ink and so on. No, it's quite simple. The Bank of England buys British government debt, or gilts as they're called, with money it has created. So in theory the British govt. can borrow money without limit as the BoE will just hit a button to create a credit to buy the issued gilts. Sounds great huh? Why didn't we do it sooner? Zimbabwe, Weimar Germany, Argentina 2001... The real reason North they're having to buy up government debt is no one wants to buy gilts any longer, as the UK is due to borrow £150bn plus this year, three times more than last year. Hold onto your hats, this is all going to get very nasty.

horseandcart:

as the UK is due to borrow £150bn plus this year, three times more than last year. Hold onto your hats, this is all going to get very nasty.

How to turn a stable economy into a copy of Zimbabwe in Ten years ! Well done it must have been very hard !

horseandcart:

Hold onto your hats, this is all going to get very nasty.

1:1 with the dollar here we come, and the dollar's best use is for toilet paper at the moment...

Back to the story - completely agree that the scrappage scheme, whilst it will increase sales, will just see government money disappear out of the country to other manufacturers. There's no point in artificially stimulating the numbers with UK money just to see that money leave the UK.

22% isn't a big drop, when 30-35% reported in the last 6 months and the numbers are small compared to March, which will be a much more important month. Not all bad though, dealers have been reporting strong used car sales in the last couple of months, and used values are recovering which will help prop up the new car market.

It will be dissapointing for all the new car names as well as the citizens because with the recession at it's worst the sales are obviously going to drop. Unfortunate...

 

horseandcart:

The Bank of England buys British government debt, or gilts as they're called, with money it has created. So in theory the British govt. can borrow money without limit as the BoE will just hit a button to create a credit to buy the issued gilts.

While this is roughly how Quantatative Easing works (nee "printing money"), this isn't strictly accurate.

It is against European Union regulations for a central bank to use quantatative easing to clear government debt, as this can lead to the kind of runaway hyperinflation seen in Zimbabwe. The bank of england is only allowed to buy bonds from non-government sources. In essence the bank is still creating money from nothing, but that money is going to the "banking system" rather than the government.

It's a small distinction, and the lines do get very blurry in real life, but I still think the point should be made.

phenergn:

In essence the bank is still creating money from nothing, but that money is going to the "banking system" rather than the government.

And what does the 'banking system', which is now half-owned by the state, do with said cash from BoE, which it got in return for worthless, so-called toxic assets? You've guessed it, they buy, either through mandate or cajoling, gilts. Hence, one step removed, money is printed/created to buy up govt. debt. And yes it will end in Zimbabwe style hyperinflation. Thanks phenergn for prompting me to explain the mechanism fully and properly, but the end effect and intention of what happened today is undeniable - the monetisation of debt - and with it the devaluation of all assets held in sterling, savings and pensions not the least of. Hence why I say, albeit with the help of the spin machine, the BBC, to convince people otherwise with this euphemism, 'quantitative easing', providing a short-term blip to sales across the economy, the result will be a total collapse in the pound within a year and then next to no ability to buy what are mainly imported cars or built from imported parts, or pretty much anything else for that matter.

H&C thanks, to be honest I do not really get the whole printing money thing, I thought was bonds....but from the news, Wiki (!) and above (you and phenergn) it seems...

....the BoE aqre flooding the banks with money, this in turns means they have large amounts of liquidity; therefore the promotion of lending; there are various ways to do this (see Wiki)....there is one thing, I have learnt shed loads more about economics in all this!!

I still think the UK will be fine, I see new businesses growing and developing in the face of this and I cannot see that stopping; as I have said before, I think now (in fact I know) that people are starting to look around for investments and money is going to start and flow; we are still going to have after shocks this year.....but it will get better, it has got more stable in the last few months and things are starting to adjust (more small car sales etc).....it starting to move along and other thing is a lot of businesses are now adjusting to the lack of credit and building for the year........its an adjustment in business models (for some).......things will start and work up again....this year it will start and get better, it starting now.....as said you still get after shocks of readjustment, but its moving in the right direction (which is all good).