Car firms in need of help from Osborne as sales fall

Figures from industry body the Society of Motor Manufacturers and Traders (SMMT) revealed that 128,811 vehicles were sold last month, down by 11.5 per cent on a year earlier. Private car sales showed the steepest decline.

Separate data from the Scottish Motor Trade Association (SMTA) highlighted a slightly higher year-on-year fall of 12.9 per cent north of the Border to 9,694 units.

According to the SMMT, demand for smaller cars, a market particularly boosted by the scrappage scheme, which ended last March, fell sharply in January, while the executive, luxury and dual-purpose sector recovered strongly.

The Ford Focus was the best selling new car in the UK last month with 7,582 registrations, while in Scotland it was the Vauxhall Corsa with sales of 510.

SMMT chief executive Paul Everitt said January's fall marked the beginning of a challenging year for the UK motor industry.

"Consumer confidence is low and it is important that government uses the March Budget to help relieve some of the financial pressure on motorists by freezing fuel duty, while providing stability and certainty on motoring taxes," he said.

Douglas Robertson, chief executive of the SMTA, echoed the call to withdraw the proposed rise in fuel duty, adding: "It also has to be remembered that consumers are currently lacking in confidence."

The UK-wide figures showed that the market share for cars with lower CO2 emissions continued to increase, rising by more than 65 per cent in January.

David Raistrick, of professional services firm Deloitte, said the data was "disappointing but not surprising", adding: "This time last year, the scrappage scheme was in place so we are not really comparing like with like.

"Compared with January 2009, last month's figures actually increased by around 15 per cent; however, it should be remembered that 2009 was the point at which the industry was crying out for help.

"Nevertheless, 2011 will be tough for motor manufacturers. We do not expect (UK] sales to go beyond 1.9 million and they may struggle even to reach 1.85 million."

Howard Archer, chief UK and European economist at forecasting group IHS Global Insight, agreed that it was likely to be an "extremely challenging" year for the car sector.

He added: "Hopefully, fleet and business sales will hold up better, especially given that many companies delayed replacing or upgrading their vehicles due to the recession and uncertainties over the recovery's strength and durability.

"But much will depend on how well the economy and business confidence hold up over the coming months."

Across the UK, just over 65,000 new diesel cars were sold last month compared with almost 62,000 petrol models. In January 2010, almost one in five new cars were sold through the scrappage scheme, and the SMMT said it expected the knock-on effect to hit the market during the first six months of 2011.

Total sales volumes are now forecast to fall by 5 per cent this year, to 1.93 million, according to industry predictions.

January's best-selling cars in the UK

1 Ford Focus....................7,582

2 Ford Fiesta................ 5,844

3 Vauxhall Astra............4,510

4 Vauxhall Corsa ..........4,363

5 Volkswagen Golf..........4,110

6 BMW 3 Series..............3,184

7 Volkswagen Polo.........3,010

8 Vauxhall Insignia.......2,236

9 Peugeot 207..................2,171

10 Nissan Qashqai..........2,108

January's best-selling cars in Scotland

1 Vauxhall Corsa...............510

2 Ford Focus...................509

3 Vauxhall Astra..............366

4 Ford Fiesta...................325

5 Volkswagan Polo..........249

6 Volkswagen Golf...........245

7 Nissan Qashqai..............241

8 Honda CR-V..................213

9 Vauxhall Insignia............191

10 Fiat Panda....................175

Source: SMMT