Motor market 'down' despite scrappage

The scrappage scheme has brought optimism to the motor industry, yet the May market is down.

Figures out today from the Society of Motor Manufacturers and Traders (SMMT) showed new car registrations fell 24.8 per cent in May, to 134,858 units.

The SMMT has said that while the 'cash for bangers' scheme may well be bringing in new orders, these are yet to translate into registrations.

The scheme came into affect on May 18th, with the government reporting last week that orders were up by 35,000.

Paul Everitt, chief executive of the SMMT, said: "While consumer confidence is improving, the UK motor industry is still facing a difficult economic climate.

"We have seen an encouraging start to the scrappage incentive scheme with 35,000 orders being placed since it was announced, although it will take time to feed into registration figures."

The SMMT's figures showed registrations over the first five months of 2009 were down by 289,598 units, equating to 27.0 per cent. May represented the thirteenth consecutive month of decline in the volume of units.

One suggestion for the fall, according to the SMMT, could be "as details of the scheme were finalised some consumers may have been holding off purchasing a car, awaiting the best deal". However, it was also noted the rate of decline had slowed in the first few weeks of scrappage.

The Retail Motor Industry Federation (RMIF) is still positive scrappage will aid the beleaguered motor industry. According to Sue Robinson, director of the RMI National Franchised Dealers Association (NFDA), representing the UK's car dealers: "The Vehicle Scrappage Scheme introduced last month should have a significant impact on car sales as we go forward, but it is still too soon to see its true effect.

"We hope that the Vehicle Scrappage Scheme will stimulate the new car market, and encourage consumers back to showrooms."

Despite the SMMT figures, many manufacturers have seen immediate benefits from the scheme. One such is Hyundai, which has seen a record market share, with orders up 750 per cent for May.

More positive signs of the motor trade beginning to pick up follow news from Hyundai that there was a rise in non-scrappage customers, as well as those taking part in the scheme.

Tony Whitehorn, Hyundai UK's managing director, said: "It has certainly been an amazing month for us, but we could have sold even more cars if we could have got them. Our dealers have taken more than 9,000 orders in the past four weeks - that's almost a third of the total number of cars we sold in all of 2008, and a massive 750 per cent increase in the number we'd normally expect to see in a month."

Sarah Garrod