Car sales have slumped to their lowest levels since 1966
5 September 2008

Car sales have fallen to their lowest level since 1966, the SMMT has reported, as Britain's consumers shy away from making big purchases in the face of recession.

Just 63,225 new cars were sold in Britain during August, the worst sales figures reported in more than 40 years.

Although August is traditionally a quiet month for motor traders, with customers waiting for the September plate change, the economic downturn has left showrooms deserted.

One London-based dealer for a major premium marque told Autocar it had been the quietest month he could remember in more than 20 years selling new cars.

As a whole, the UK's new car market was 18.6 per cent down year on year - but Britain's own brands were hardest hit.

Aston Martin sold just 19 cars last month, compared with 58 cars in August 2007.

Jaguar, which has been resurgent since Tata bought the company, sold only 273 cars, a 40 per cent drop year-on-year. And Land Rover posted just 422 sales, a massive 58 per cent fall compared with last year.

Other luxury car firms like Porsche and Lexus have also seen year-on-year sales in this country fall by more than 50 per cent.

It was makers of more affordable, economical cars that posted less dramatic downturns. Ford's August figures fell by just five per cent. The Focus is still the UK's biggest selling model this year.

Roeland de Waard, chairman of Ford Britain, said "Ford is meeting the imperatives of family motoring - lower fuel costs and CO2 emissions from stylish affordable vehicles."

But today it was revealed that Bentley's Crewe factory has cut back to a three-day week, and JLR's Solihull plant has called Friday a "non-production day" to avoid stockpiling new cars.

"We're concerned by the reluctance of consumers to commit to major purchases," said SMMT chief executive Paul Everitt. "There is a clear need for sustained action by government to boost the economy and restore confidence."

Government officials are keen to stress that the motor industry's downturn has been felt worldwide and not just in the UK.

But contrary to that, BMW reports that its August global figures rose by two per cent year-on-year.

In spite of the plunging UK figures in the automotive and other industries, Prime Minister Gordon Brown reiterated that he was "cautiously optimistic" about the state of Britain's economy.

Will Powell

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Comments
19

5 September 2008

Cars have absolutely no business being as expensive as they are. Manufacturers will hopefully now realise that they are too much and that if consumers revert to the times of the 60s, 70s and early 80s when if you wanted something you bloody well saved up for it ! Kind of makes it harder to buy something if it takes 15 years to save up for it.

5 September 2008

I agree - manufacturers need to really lower their prices - they must be completely blind if they haven't realised that. For example, as much as I love the MINI, BMW need to seriously get a life with how much they charge for it. Citroen, Peugeot and Toyota also need to reduce the price of their C1, 107 and Aygo. Some models can cost as much as £9000, which is absurd for such a little, if fun car. Even the cheapest models list prices are hitting £7500. Same goes for pretty much every car on sale today. Dealers need to get some very keen pricing going if they don't want to feel the bite of the crunch. Same goes for used cars. If car manufacturers haven't started lowering prices by the end of 2008, then they're clearly a little bit daft.

"The creative adult is the child who survived."

6 September 2008

Its all very well as the casual observer saying cars should be made cheaper, but I have been lucky enough to be able to look round one of the development facilities of one of Europe's largest manufacturers recently.

If you haven't, I don't think you can appreciate what goes in to making a new vehicle and the equipment and costs involved. When you buy a car, you're not just buying the metal and mechanical bits, you are buying the research, development, safety and environmental costs as well.

Whilst the general public, the press and various other governing bodies and authorities demand that cars get quieter, more efficient and all round better, then development and costs will continue.

 

 

It's all about the twisties........

6 September 2008

Does no one realise that this is a non story? Until 1999 August was the biggest registration month of the year because of the plate change. After that it has become the slowest month of the year with hardly any vehicles registered because people will wait until the new registration plate on 1 st september. The amount of cars registered in August is a tiny blip as far as the whole year is concerned. September will be the real pointer as to how car sales are going. As for the prices of cars, I have worked at a Ford dealership for 20 years and the prices of new cars now are virtually the same as when I started in 1989 even though the specifications have increased along with safety equipment. The press have siezed on the august registration figures as another way to bring the the country down. The economic downturn is a self fullfilling prophesy - the more its reported and talked about the more likely it is to happen.

6 September 2008

Jeffrey, you're comparatively lucky. Ford are down only 5% in August and 2.5% year-to-date, compared to 19% and 4% down respectively for all marques. Volvo by the way are rocketing. 30% up in Aug and 20% YTD. What gives!

As for Bruce Wayne(Batman?) and Mini1 saying prices are too high. Blimey, you ain't seen nothing yet. You do know that in the last year or so the pound has gone from €1.50 to €1.22, and strongly likely to fall further. Of the top ten best sellers in the UK only one has a production plant in UK for home-sourcing - the Vauxhall/Opel Astra. Most of the current pound prices in the UK will reflect the earlier, higher euro exchange rate from earlier this year or even latter part of 2007, due to long leadtime manufacturing and supplier items. So, for argument sake, the Ford Focus, the No.1 UK seller(YTD) is made in Germany and Spain. The current price of a typical Focus in UK is:

£14K. Focus 5dr 1.6TDCi(109PS) DPF 5-spd 'Style' £14,025(£17K on the road); and €17,225 in Germany wholesale(before 19% VAT and otr charges). That's an equivalent exchange rate of 1.23 euros to the pound. As I say the pound has already hit this level this last week and likely to fall further, possibly approaching parity. Ford GB will be forced to pass on the ex-works cost rise in pounds to their dealer network. The dealer can choose to hold prices and reduce his margin or raise his on the road price. If he follows the former he will go insolvent within a few months.

Expect price rises, around 3-5%, for cars/marques with firmish demand and dealer bankruptcies of minimum 10% of existing number for remainder, in autumn/winter 2008/9 period.

6 September 2008

We should at least see the dealers pushing for good deals, then. Surely they're going to be wanting to do all that is possible to sell cars - it's their job. They'll do anything they reasonably can to build their sales numbers up. If manufacturers themselves won't lower prices, then surely quite a number of dealers will be screaming special offers out at everyone over the coming months. It'll be interesting, also, to see figures at the end of this month to see how many '58' cars were registered. That will tell us what's really happening.

"The creative adult is the child who survived."

6 September 2008

Wow, it gets worse. Ford GB seems pretty keen on matching UK/Continetal Europe prices against the shifting £/€ rate already, but take a look at Volkswagen. For instance:

lowest spec Golf:

3dr 'S' 1.4 5spd price before VAT and otr charges in UK: £9,851; in Germany €13,697. That's an equivalent exchange rate of 1.39. Boy those UK Golfs are cheap in euro terms!

Or how about a tasty GTI 2.0 TFSI 3dr with 6spd DSG and leather for £18,221(before VAT and otr charges) against €24,664 in Germany for same spec. That's an implied exchange rate of 1.35. It's a wonder Germans aren't ordering LHD specs at UK VW dealers already!

Like I say, for cars with good demand and sourced from the eurozone, it is likely that their UK prices will rise very shortly to compensate for the weak pound.

6 September 2008

Well, looks like the car manufacturers are going to have to do for us what they have had to do for the high tax countries like the Nordics....sell 'em cheaper. I frankly could not give a flying f**k about the car manufacturers who have been selling their products far too expensively and with crappy service for far too long. Car salesmen are equal first in lack of professionalism with estate agents and add ZERO value. A distribution network that adds nothing to the consumer but costs us a lot and cost the manufacturer very little. Moreover, this block exemption they continue to enjoy also shafts the consumer. I want a mega car site where I can go and try any number of cars from one supplier. If anyone has ever been to Belfast, you should go down the Boucher Road where they have every different dealership (stealership ?) you can think of, from Ferrrari to Renault and they are nearly all owned by Isaac Agnew. Superb.

6 September 2008

Regarding Northern Ireland car dealers I wonder if they are prospering at the expense of those south of the border, in the Republic. Sales in the Republic in August collapsed 42%. Yes the Irish Govt. has messed around with vehicle registration tax but the underlying reason for the continuing collapse of the new and used car market there is the dire wider economic situation. Like the UK and Spain(down 41% in August) these three countries relied on housing and banking for their new paradigm economy prosperity. All three are now hopelessly bust and there'll be many dealers shut down as a result.

The Nordic countries may tax cars heavily but their economies by comparison are good. Norway has years more oil and gas and an already built up hundreds of billions of euros equivalent sovereign wealth fund. Sweden although without oil or gas does still have a functioning manufacturing sector with real wealth. Volvo sales are buoyant in the UK currently against the trend. Finland is a little powerhouse with Nokia and so on and a high level of education. Denmark has one of the highest standards of living in the world - genuine, unlike Eire's EU payments and off-shore banking funny money.

The UK, Spain and Ireland are all bust. However prices of in-demand cars will not drop just because the UK can't afford them. Many areas are still stable or growing - Russia, China, Brazil. Volkswagen are running extra Saturday shifts in Wolfsburg to meet demand for the runout Golf mark V. Audi's sales are booming in the UK and even gained ground in the US this August against an overall near 20% market decline. A fall-off of demand in the UK can be soaked up elsewhere where people still have real money. Tough, but true.

6 September 2008

Mr Wayne, having read a few of your posts today I have managed to gain a feel for your opinion on car sales - you think new cars are too expensive and service from sales executives is wothless!

I thought, as an ex-car sales executive, I would provide a response. Firstly, new cars are far from expensive, in fact how you can even consider that somewhat surprises me. Today, there are great cars for all budgets - Ford will sell you a new car from £5,500 for example. There are also great cars for all types of people - BMW will sell you a coupe/MPV for example, and there are cars for people who want great fuel economy - 70mpg for example. In short, there is massive choice, for all budgets and for all types of customer. Plus, cars are safer, kinder to the environment (and your back pocket) and actually cheaper than 15 years ago (I think Auto Express calculated cars are around 25% less now). And if you look at the finance deals, you can be driving a brand new, safe car, for around £30 a week with a tiny deposit. Cars are not expensive, although I except your point that some variants don't offer the same value for money as others.

Regarding sales executives - once again there are going to be some really bad ones, but there are also loads of really good ones who just want to get on and sell. The problem is that there is no money in new car sales, that means you will struggle to find people who are happy to work 55 hours a week for £15K! Therefore you end up having to employ those that really don't care about their earnings or those for which a company car is the attraction. Sadly, those that were good at selling and offered good service are dying away.

If car prices come down again then so will the value of part exchanges - you won't be any better off unless you don't have a car to trade out of.

Out of curiosity, how much do you think a typical small family car, like a Focus or Golf should sell for in order for you to think they are not expensive?

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