Fleet News

New car sales set to rocket in 2001

NEW car sales in Britain will reach record levels next year and while private buyers will lead the surge, fleet and business car sectors should reach new levels.

Leading economists are forecasting the combination of a sound economy, the possibility of interest rate falls, the release of pent-up demand caused by private buyers waiting for new car price reductions and a raft of new models will result in a record-breaking 2.33 million new car market.

However, a boom in private new car sales will further depress the used car market, resulting in residual value falls, although perhaps not as great as in recent months, as buyers opt for a cut-price new car as an alternative to a nearly-new or ex-company car.

The new car market forecast comes from HSBC Bank and, if realised, would send new car sales soaring past the record 2,300,944 units sold in 1989.

If fleet sales remain at around 46% of the market then companies responsible for running more than 25 cars will buy a similar number of cars to private customers and in the process set a new fleet buying record beating the 1,055,816 unit record set in 1998.

Mark Berrisford-Smith, senior economist in the business economics unit at HSBC Bank, said: 'The motor trade is emerging from a long period of uncertainty brought about by the inquiry into new car prices. While the economy as a whole has enjoyed a lively revival during the past 18 months, the new car market has been stuck fast in the mud, as potential buyers have held off in the expectation that prices would eventually come down.'

However, last month saw private buyers begin to move back into the new car buying market and Berrisford-Smith said that trend should be sustained so long as manufacturers do not try and reverse recent price cuts and customers do not form unrealistic expectations on the basis of inappropriate price comparisons with some continental countries where the tax regimes are markedly different. He added: 'We expect that the overall new car market will grow by a healthy 5% in 2001. This would take new registrations to 2.33 million, just ahead of 1989's all-time record.'

However, Society of Motor Manufacturers and Traders' head of policy and economics Paul Everitt took a more conservative view, predicting a 2,225,000 market. But, he added: 'We always take a cautious view. There is a degree of pent-up demand and the market is always a bit of a roller-coaster and we could see a 2.3 or 2.4 million market.'

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