New car sales fall by one-third

Sales of new cars in the UK fell in November by 36.8% on the previous year, to 100,333 vehicles, the biggest monthly drop in 28 years.

Figures from the Society of Motor Manufacturers and Traders (SMMT) also showed year-to-date sales to be 10.7% lower at 2,023,104.

It said the month had been another difficult one for the industry.

Car sales, an indicator of economic confidence, have fallen victim to the wider downturn.

The SMMT said the decline was most pronounced in the market for private cars, with registrations down 45.1% in November.

The annual fall was the biggest since June 1980, except for a shortfall in 1999 due to the move to a twice-yearly change in registration plate.

"Sharply deteriorating private car sales provided further clear evidence that consumers are now sharply cutting back on their spending," said Howard Archer, chief UK economist for IHS-Global Insight.

New car sales have now fallen for seven months in a row.

VAT effect

The motor industry also said that the widely-anticipated government announcement of a cut in VAT had led some customers to delay sales.

"November has been another difficult month for the motor industry and whilst some consumers may have delayed their purchases to take advantage of the recent VAT reductions, overall demand continues to fall," said Paul Everitt, SMMT chief executive.

"Urgent action is now required to ease access to credit and finance, both to support consumers and meet the cash-flow needs of the industry."

The Bank of England is widely expected to cut interest rates from their current level of 3% later on Thursday.

But banks have been tightening up on lending criteria for individuals seeking personal loans, such as car loans, which are being affected by the same credit squeeze which is affecting mortgages.

Brand effect

The sales drop was bigger for the luxury brands - showing that the recent rises in petrol prices were also influencing buyers.

Sales at Lotus were down 73%, Mitsubishi was down 70%, Alfa Romeo fell 68%, and Land Rover and Renault both fell 64%.

The largest company by number of cars sold, Ford, reported a fall of just 12%, while the second largest producer, Vauxhall, saw a decline of more than 38%.

The best performer was Volvo, which experienced a drop of only 6.7%.

The market decline was across all types of vehicle, but small cars weathered the decline better than most and reported an improved market share.

And diesel sales accounted for nearly half of all new cars purchased, reaching a record high of 47% in November.

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