UK October car registrations recorded their biggest monthly gain this year, rising 31.6 per cent on the month, according to figures from the Society of Motor Manufacturers published on Thursday. Here, for interest, is how the numbers stack-up in chart form:
That’s quite an upsurge on the private buyer front.
While a lot of the increase will be down to the UK government’s scrappage scheme, Howard Archer, economist at IHS Global Insight, feels it still marks a very positive turnaround for discretionary consumer spending. As Archer wrote on Thursday (our emphasis):
While the further pick up in car sales in October was clearly driven primarily by the scrappage scheme and a desire to beat January’s VAT hike, it may also be a sign that a significant number of consumers have greater scope and willingness to step up their discretionary spending.
This is due to their purchasing power being lifted by sharply reduced mortgage interest payments, lower utility bills and a moderation in inflation. Hopes that significantly higher car sales would help the UK economy return to growth in the third quarter - as had been the case with both Germany and France in the second quarter - proved misplaced. Nevertheless, the further marked improvement in car sales should help the economy to finally return to growth in the fourth quarter.
Although, he added, the benefit to the UK economy will depend on the degree to which new cars purchased under the scheme were manufactured in the UK. Further out, he warned, there is the danger that car sales will fall back markedly once the car scrappage scheme ends and VAT rises in January.
Related link:
Cash-for-clunkers’ boosts US car sales - FT Alphaville
