New-car sales in Britain dropped by 22% in October compared to a year ago when demand was artificially boosted by an incentive scheme, according to the Society of Motor Manufacturers and Traders.
As a whole, sales in 2010 are on course to increase by 1.5% compared to last year. The SMMT estimates that there will be more confidence and demand in 2011 on the back of "slow but steady" economic growth.
CEO Paul Everitt said that there was a “significant fall in October's new car registrations,” indicating the effect of the Scrappage Incentive Scheme last year as well as a weakening in consumer confidence.
He added that total new car registrations in 2010 are estimated to be 2.026 million units, 1.5% up compared to 2009. The scrappage scheme, which is jointly funded by the government and industry, gave motorists 2,000 pounds to trade in cars more than a decade old for more fuel efficient models.
The scheme ended earlier this year. The UK auto industry is bound to face some challenges in 2011 when sales tax increases to 20% from 17.5% and when government measures start to make an impact.
Howard Archer, economist with IHS Global Insight, said that it’s likely that a portion of the car sales will be brought forward in the last two months of 2010 from 2011 as purchasers aim to beat the rising of the Value Added Tax. [via autonews - sub. required]