This figure occurs in a year that has seen sales fall 3.8 percent
so far compared to the same span in 2007. As the number of new cars
sold continues to drop, so too does the number of finance sales
opportunities for finance houses.
 
Consumer confidence falls lie at the heart of the trend. According
to a recent poll by YouGov, 27 per cent of consumers have put off
purchases such as new cars in order to cut back on spending, while
5 per cent have considered giving up a car to save money.
 Paul Everitt, SMMT chief executive, highlighted concern for
“the reluctance of consumers to commit to major purchases”, urging
“a clear need for sustained action by government to boost the
economy and restore confidence”.
 
According to National Franchised Dealers Association director Sue
Robinson, such action should take the form of an interest rate
reduction by the Bank of England.
 By holding rates at 5 per cent in September, said Robinson,
the Bank “missed an opportunity to kick-start the economy” by
alleviating the mortgage worries of homeowners and thus increasing
levels of disposable income.

While consumer reticence continues, however, factors such
as fuel efficiency and environmental credentials will be most
important in keeping brands above the sales slump.
 According to a study undertaken by http://www.cleangreencars.co.uk/,
brands with high CO2 profiles such as Porsche, Land Rover, Jeep and
Chrysler have seen sales crashes of more than 50 per cent in
August. Conversely, the mini segment doubled its sales volume in
August, taking its year to date growth to 37.1 per cent, the SMMT
said. Everitt commented: “Industry is encouraged by the growing
interest in lower carbon cars, but is concerned by the reluctance
of consumers to commit to major purchases.”
 
Meanwhile, Sainsbury’s Bank reported that 27 per cent of potential
car buyers it surveyed plan to use a loan to finance their next new
car purchase (see graph).
 In any case, the situation will crystallise further as sales
figures for September unfold. Although September is usually a
strong sales month due to the new licence plate, the SMMT has
predicted a 4.6 percent decrease in figures year-on-year for
2008.