UK Car Sales Drop By Almost A Quarter

June 9th, 2009

UK sales of new cars were down by a quarter in May compared to the same time last year, despite the government’s introduction of a £300m scrappage scheme to encourage buyers back into the new car market. Sales have tumbled by 24.8%, the 13th month in a row that sales have fallen.

A total of 289,958 vehicles were sold between January and May 2009, 289,958, a worrying drop of 27.9% from the same period in 2008. No other industry has been hit harder by the recession than the car industry has, and many manufacturers have been forced to resort to desperate measures to stay in business. The constant decline in sales has caused many manufacturers such as Nissan, Vauxhall, Honda and Ford to temporarily suspend production in their UK factories and a large number of workers have been left without jobs.

The government have implemented a new scrappage scheme to address the problem, which gives potential buyers a £2000 incentive to trade in their old cars registered before August 1999 as scrap and purchase a new one instead. Granted, £2000 is not going to enable you to trade in an old banger and buy a new Mercedes Benz, but it’s a step in the right direction and more than 35,000 orders have been put in so far, though the result of this is yet to be seen in the sales figures. This does not mean the scrappage scheme has failed however, as it only launched on the 18th May and will take time to convert into new car sales. The idea is that the project will help to restore consumer confidence and that June’s sales figures will tell a different story.

But there is one specific car market that is still doing well despite the woes of the wider car industry. The ‘mini’ segment grew by 50% in May, suggesting that consumers would rather buy a Nissan Micra, a Mini or a Ford Fiesta than a fuel-guzzling sports car or a people carrier. Smaller cars are much more fuel efficient not to mention cheaper to buy, for a lot of people a much more sensible option while times are hard.

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