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UK New car registrations reach 10 year high in May

UK New car registrations reach 10 year high in May -Ford's Fiesta

The UK car industry is enjoying its strongest period of growth for a decade, according to the Society of Motor Manufacturers and Traders (SMMT). New car registrations increased 7.7 per cent in May to 194,032 units – the most in May since 2004.

The SMMT said car sales have grown uninterrupted for 27 consecutive months — the longest unbroken expansion since records began being keep in 1959.

Last month’s increase was smaller than April’s annual rise of 8.2 percent and March’s 18 percent jump, leading the SMMT to forecast that sales growth will slow further.

“With SMMT forecasting an overall rise of around 6 percent over the year, the coming months should see some leveling off in growth rates as underlying demand stabilizes,” SMMT CEO Mike Hawes said in the statement.

Britain’s car industry accounts for more than £60 billion turnover, with almost 150,000 people employed directly in manufacturing and more than 700,000 across the wider automotive industry. It also accounts for 10 per cent of all UK export of goods.

Car sales were one of the first areas of British consumer demand to recover after the financial crisis, with cheap financing a key factor behind demand.

“Looking ahead over the summer months it will be interesting to see … [if the] growth rate drops down a gear. If there is a slowdown, all eyes will be on manufacturers and the actions they take to try to drive the market forward,” said Richard Lowe, head of retail and wholesale at Barclays.

The increase in new car registrations represent 27 consecutive months of growth, breaking the 26 month record set in the late 1980s. However, the SMMT says the coming months should see some levelling off in growth rates as underlying demand stabilises.

Ford’s Fiesta subcompact remained the UK’s top-selling car in May, but Ford’s Focus compact dropped to fourth place, with Volkswagen’s Golf and General Motors’ Vauxhall Corsa taking the third and fourth spots, respectively.

In Europe’s other major markets, sales varied last month. New-car registrations in Germany, Europe’s largest auto market, rose 5 percent in May, boosted by incentive-driven sales from carmakers including Opel and Citroen.

In France, sales edged up 0.1 percent, while in Spain they rose 17 percent, fueled by a government subsidy scheme aimed at increasing sales. In Italy, deliveries fell 4 percent.