Financial crisis forces a rethink of home-market sales, but exports should still rise
8 December 2011

Britain’s car makers are slashing 40,000 new car sales off their forecasts for next year thanks to the deteriorating financial situation.

The Society of Motor Manufacturers and Traders believes UK sales in 2012 will be “flat”, suggesting a figure of 1.92 million sales next year, the same as this year. However, as recently as September the SMMT was predicting a rise in sales next year to 1.96 million units — a 40,000-unit increase over the 2011 figure.

“The figures are revised on a quarterly basis and we’ll be looking at them next in the new year,” said SMMT boss Paul Everitt. “The best we can now hope for is that the market will be flat next year.”

The continuing eurozone crisis and the British government’s downbeat autumn statement has forced the downgraded forecast. Everitt believes fleet sales will remain buoyant and that any recovery in retail sales will not materialise in 2012.

“My optimism is that fleets will continue to take about 1.1m units, as they have in previous years, while retail sales will stay around 800,000,” he said. At least one senior industry manager has predicted that next year could be “horrendous” and “one of the toughest we’ve had for a very long time”, but another cautioned that “it depends on what launches you have next year. If you have the right new models, it might not be so bad”.

New car sales have been reasonably buoyant in the three-year financial crisis. Immediately after the 2008 Lehman Brothers crash, two years of scrappage subsidies added around 200,000 new car sales a year. Hyundai was one of the main beneficiaries, shifting an extra 17,000 cars.

However, there’s no sign of the industry asking for further help in 2012, if only because the government has no spare funds. Despite the crisis in the eurozone (which takes 60 per cent of the UK car industry’s exports), the SMMT is predicting better news for exporters. The current forecast is for an extra 50,000 to 100,000 cars to be exported next year, taking the figure from 1.35m-1.4m in 2011 to a predicted 1.4m-1.5m.

Julian Rendell

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