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Recession fears will drive UK car sales down in 2012, says PwC

Automotive experts at PwC today warned the UK car market will continue to be affected in 2012 by worsening economic and employment prospects.

Year on year (yoy) figures for December 2011 show a 3.7% fall in new UK car registrations to 119,188 units. Overall, 2011 saw a 4.4% drop in registrations, to 1,941,253 vehicles, when compared with 2010.

Private demand remained weak, falling by 13% in December and 14.1% for the full year. For 2011, UK private registrations accounted for just 42.4% of the market compared with 47.2% in 2010.

Michael Gartside, senior analyst with Autofacts, PwC’s automotive forecasting service, said: “With the economic outlook deteriorating and unemployment forecast to increase further in 2012, we anticipate a 3% decline in new car registrations to around 1.88 million units.

“Continuing economic uncertainty and the potential for an escalation of the Eurozone debt crisis, presents clear downside risks to this forecast. Assuming there is no further deterioration we could still see signs of improving demand within the second half leading to a full recovery in demand from 2013 onward.”

The UK data forms part of PwC’s monthly European car report which demonstrates that the Eurozone debt crisis is clearly impacting registrations elsewhere. Year on year, registrations across the EU and those in the European Free Trade Association, (Iceland, Norway, Liechtenstein and Switzerland) show a fall of 1.5% to 13.56 million units, which marks a fourth consecutive annual drop for the market. A further decline in 2012 is also predicted.

Gartside added: “One market constraint will be the inability of most governments to stimulate demand via scrappage incentive schemes, seen in 2009 and 2010, which is one reason why we expect the European market to fall again, by 5% to just under 12.9 million units in 2012. This would be a decline of over 3m in comparison with 2007 when registrations peaked at 16 million units.”

Elsewhere in Europe, the Italian car market registered 111,112 vehicles in December, down 10.9% on 2010 with a weak 2012 forecast. In Spain, registrations fell by 3.6% to 66,458 units in December, with an annual decline of 17.7%. In Germany, a 30.3% surge in sales of upper class cars in December helped drive overall year on year growth to 8.8% and 3.17 million units, while in France there was an overall decline of 2.1% from 2010, to 2,204,065.

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