Car sales keep dropping but £2,000 scrappage discount tempts buyers
June saw new car registrations fall for the 14th month, despite hopes the car scrappage scheme would boost sales.
New registrations were down 15.7 per cent to 176,264 - the smallest fall since July 2008.
While sales across the board struggled, data from the Society of Motor Manufacturers and Traders (SMMT) show a major upswing in private buyers, since the car scrappage scheme was introduced in May.
The initiative provides a discount of £2,000 for any new car buyer scrapping a vehicle over ten years old.
Registrations to private buyers rose for the first time since November 2007, rising 3.9 per cent.
Paul Everitt, SMMT chief executive, said: "We are now beginning to see the positive impact of the scrappage scheme translate into new vehicle registrations,"
"We expect the pace of improvement to increase in the coming months, but we can already see the industry making steady progress on the long road to recovery."
Some 17 per cent of new cars sold were Fords - with the Fiesta and Focus the two most popular new cars.
Vauxhall's Corsa and Astra were the next most popular cars.
The figures show a major swing to small cars and 'superminis'.
However, there are warnings the boost in car sales may simply be squeezing spending elsewhere in the economy.
"There is a significant danger that increased spending by consumers on vehicles will come at the expense of spending on other big-ticket items at least," said Howard Archer, chief UK economist at IHS Global Insight.
"While consumers' purchasing power has been lifted by sharply lower mortgage interest payments and reduced inflation, consumers remain under pressure on a number of fronts."
He added: "The benefit to the UK economy will also depend significantly to what degree the new cars purchased under the scheme are manufactured in the UK."
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