Car sales plummet (UK)

UK car sales have plummet since March. During March, sales fell down to 0.5% but last month sales of SUV's fell by 18.3% and small family cars like the Ford Focus, KIA Cee'd and Peugeot 308 saw a 8.3% drop compared with May 2007, despite cleaner engines added to the Focus range. Sales of large family cars (Ford Mondeo, VW Passat, Chevrolet Epica) fell by 4.5%, however, its not all bad, sales of city cars (Hyundai i10/KIA Picanto, Suzuki Splash) rose by 120%.

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.

Via AutoCar > UK car sales fall