Scrappage scheme has no effect yet as car sales drop by 25%
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 figures have plummeted by 24.8%, meaning that sales have dropped for 13 consecutive months.
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. The recession has affected the motoring industry more than any other, and car manufacturers have had to resort to drastic measures to keep their heads above water. The sharp fall in sales has forced many car makers including Nissan, Vauxhall, Honda and Ford to implement temporary factory closures and many employees have found themselves out of work as jobs have been cut.
The new scrappage scheme introduced by the government should help begin to solve the problem, giving 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 the positive effect on car sales cannot be expected to be visible already. The idea is that the project will help to restore consumer confidence and lead to rise in sales from June.
In spite of the car industry’s troubles there is one area of the market that is still flourishing. 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. These small city cars are not only cheaper to buy but also more fuel efficient, for a lot of people a much more sensible option while times are hard.
Citizens Automobile Finance
Tags: buy a new mercedes, buy a nissan, car sales, cars, new cars
