SUV sales drop 18.3 per cent; Ford Focus drops 8.3 per cent
6 June 2008

Sales of popular family cars and 4x4s tumbled last month in apparent reaction to the economic slowdown, rising fuel prices and the Government’s proposed increase in road tax, which is scheduled to be introduced next year.Perhaps unsurprisingly, registrations of SUVs plummeted by 18.3 per cent, but sales of popular family cars like the Ford Focus have also suffered; its total dropped 8.3 per cent compared with May 2007, despite the more economical engines introduced as part of its recent refresh.The sports car segment suffered a sales drop of 14.5 per cent. But sales of luxury executive saloons, like the Mercedes E-class and BMW 5-series, are remaining buoyant, suggesting that company fleet schemes have yet to feel the pinch.These latest SMMT sales results provide the first evidence of the impact of the Government’s proposed changes to Vehicle Excise Duty – commonly known as road tax - since their were put forward in Chancellor Alistair Darling’s budget. The drivers of some cars will see their road tax double.Yesterday the Treasury revealed that more than a million households with gross incomes of less than £15,000 face above-inflation increases in road tax. Poorer families tend to drive older, less-efficient cars. Indeed, the Budget’s road tax increases have been described as a “poll tax on four wheels” by one rebel Labour MP.The value of secondhand cars has also taken a blow since it emerged that the road tax changes will be applied retrospectively to vehicles registered since 2001. “People are now finding themselves in negative equity,” said Edmund King, president of the AA. “We are talking to people who are extremely concerned. They can't afford to run their vehicles but they are trapped as they can't sell their cars.” In another blow to Gordon Brown, Tony Blair told GMTV that the cost of motoring was contributing to the Prime Minister’s unpopularity and his disastrous poll rating. Blair said, “Voters are thinking, ‘It used to cost 30 quid to fill up the car; now it costs 60 or 70 quid.’” In developing markets elsewhere in the world, car sales are booming. Ford has just announced a $500 million (£260m) expansion of its Chennai factory, South India, which will be used as a hub to serve the region. Meanwhile, Russia’s third-largest car maker, OAO Sollers, will invest $200 million (£110m) to expand its dealer network to respond to soaring demand.

Will Powell

Read James Ruppert's blog on falling new car sales.

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Comments
10

6 June 2008

I think the way to solve all the road tax business would be to take the VAT straight off sub-120 g/km cars, and half it on sub-140 g/km cars - this would stop everyone buying 4x4s and it would also mean that the smaller cars would be cheaper - an incentive to going green and downsizing. But I still think that if we are expected to downsize (most people will be now, considering the fuel prices and economy), we should get a much better incentive - like the VAT-chopping I've mentioned. Smaller cars are beginning to get more and more luxurious - just look at the flashy dashboard of the new Ibiza or space-age Ford Fiesta. The manufacturers also need to be pushed harder to reduce their CO2 emissions in their cars - if BMW can get a sub-120 g/km 3-Series and Ford can make a Focus Estate giving out just 115 g/km, then I'm fairly sure anyone can!! Then we could all save huge amounts of money!

"The creative adult is the child who survived."

6 June 2008

To be expected and no surprise to me. Cars become a luxury to most people if they are struggling to keep a roof over their heads.

7 June 2008

... which I'm not, so hopefully some good deals on hot hatches will arrive soon? That would be nice! :)

7 June 2008

It's a buyer's market out there and I would imagine there are some serious discounts to be had off both new and used.

Haggle hard!

7 June 2008

Have you ever bought a new car? I went into Ford the other week and was attempting to get a discount out of them on the Focus ST was like trying to draw blood from a stone... Mind you I haven't tried the old market comparison trick, but then where do you look that is actually reputable?

7 June 2008

i think the market is remarkably resilient considering how much the media overplays 'credit crunch' etc.....consumers appear to be making more sensible buying decisions.....maybe people who dont actually need SUVs and 4x4s are choosing something that takes up less space, is lighter and more socially acceptable...and also cheaper to run...

as said before its a buyers market- this can only be a good thing- with james ruppert catastrophising on his blog he would do well to remember the dark days of 1991 when the market dropped from over 2M units to 1.5M.......3.5% down on 2007, one of the best years ever is not going to see dealership boarded up....


what is the deal with the media and autocar talking of recession?......we are not in one nor forecast to be!!!......dont talk us into one- thats all it takes!!!.....a few autocar readers etc holding off a purchase that they can afford is the last thing the market needs!!!

why not run an article about the best deals available?....budget beating tax evading discounted fun to drive motors!!!!...autocar come on!!!!!!!


7 June 2008

I think the VED argument is a red herring - the proposed annual increases pale into insignificance compared with the weekly fill-up costs.

Spain's new car sales were off 24% last month. There have been minor increases in annual tax - mine went from €106 to €113 for a 2.0TDI. However since taxes on diesel are lower here, the oil price increases are having a bigger impact on pump prices.

9 June 2008

[quote sierra]

I think the VED argument is a red herring - the proposed annual increases pale into insignificance compared with the weekly fill-up costs.

[/quote]

We've always had significantly higher fuel costs here in the UK and are used to them being a significant proportion of our motoring budget. However, VED has only recently been banded so that at one end of the scale you have £0, and at the other £400. For many people, £400 is what they might spend on servicing in a five year period, or perhaps two new sets of tyres. They now have to find that sum in addition and annually!

No, VED is not the lone culprit here, but it's also not the red herring you claim it is.

9 June 2008

[quote lukemedway]Have you ever bought a new car? I went into Ford the other week and was attempting to get a discount out of them on the Focus ST was like trying to draw blood from a stone... Mind you I haven't tried the old market comparison trick, but then where do you look that is actually reputable? [/quote]

Sorry I haven't answered this soon. It does depend on the model and manufacturer. Normally Ford are good at discounting but it does depend on the dealer - some will and some won't.

I always find the cheapest UK sourced internet price from a broker such as Broadspeed and show that to the dealer. If they can't get anywhere near then I walk away. If they can get to within £250 then I would take it because that would be the cost of the train to to a far away dealer and driving back.

I managed to get £2k off my Legacy this way which was better then What Car's best price at the time, and the model I bought had only just been released in its current form.

I wouldn't imagine that they would discount the ST much in any case.

17 June 2008

I always find the cheapest UK sourced internet price from a broker such as Broadspeed and show that to the dealer. If they can't get anywhere near then I walk away.

Even easier than negotiating yourself get some experts to help. I go to broombroom.com and they always find me an excellent deal and are really knowledgeable about the best car options in the current climate re depreciation, best finance package etc. It saves me so much time and stress - and no waiting around in showrooms to talk to dealers biased towards one brand.

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