'Feel-bad' car makers expect slow growth

RUSSELL HOTTEN

Motor manufacturers warned yesterday that car sales this year would grow at a "relatively slow pace" and believe the Treasury's 3 per cent economic growth forecast for 1996 is too optimistic.

Members of the Society of Motor Manufacturers and Traders, which joins several forecasters to have queried the Treasury figures, said uncertainty about job prospects and a subdued housing market meant consumer confidence would remain fragile.

The comments came after a difficult year in which car sales rose just 1.8 per cent, and are forecast to rise by only 1.3 per cent this year.

Despite SMMT figures out yesterday showing that sales at the top end of the market are surging, the private buyer deserted the market and diesel car sales fell for the first time since records began.

Margaret Pyne, SMMT chief economist said: "Most of our members feel that growth this year will be below the 3 per cent level the Treasury forecast at the time of the Budget.

"Members believe the absence of a sustained improvement in the 'feel- good' factor will continue to act as a major impediment to further significant growth in expenditure on durables, including cars."

Last year's car sales rise of 1.9 per cent was underpinned by a 7.2 per cent rise in fleet registrations. But manufacturers believed the fleet replacement cycle was probably at its peak and would decrease in 1996, the SMMT said.

Diesel car sales, which have consistently risen year-on-year, were 19.1 per cent down on last year. Manufacturers have spent millions of pounds developing so-called environmentally friendly diesel engines. The SMMT believed the fall had nothing to do with reports last year that diesel "particulates" were dangerous. The drop was blamed on a fall in the price of second-hand diesel vehicles.

There were wide variations in the UK sales pattern. The biggest rise in sales came in Oxfordshire, up 27 per cent, and Northants (21 per cent).

The heaviest falls were in Buckinghamshire (20.9 per cent) and Derbyshire (17.4 per cent).

Sales of cars to the private buyer, which in 1995 as a whole fell by 2.9 per cent, shrank by just 0.9 per cent in the South-east. The region had been badly hit in 1994.

In Greater London sales rose 0.9 per cent, but fell 10.5 per cent in Bedfordshire. In 1994 it was in the rural regions where sales were growing fastest. But in 1995, sales in Scotland fell 6 per cent, including a 10.6 per cent decline in the Highlands. Yorkshire saw a 5.4 per cent fall, including 9 per cent in Humberside.

Meanwhile, world-wide sales of Jaguar cars rose more than 30 per cent in 1995 to 39,725, up from 30,020 in 1994. The value of exports exceeded pounds 1bn for the first time in the company's history.

The Ford subsidiary said sales in the US, Jaguar's largest market, increased by 19 per cent to 18,085, while the UK saw a rise of 30 per cent to 8,796 cars. Sales on the European continent more than doubled with Germany, Italy and Spain leading the way.

UK car registration by market segment

Cars registered in the year to December 1995

Segment Number % of total % change

Mini 17,841 0.9% -7.6

Supermini 525,365 27.0 5.6

Lower medium 638,925 32.9 -0.6

Upper medium 484,020 24.9 -4.3

Executive 125,692 6.5 4.8

Luxury saloon 15,545 0.8 34.0

Specialist sports 37,426 1.9 32.0

Dual purpose 80,427 4.1 13.1

MPVs 20,125 1.0 39.9

Total 1,945,366 100.0 1.8