How The Economic Down Turn Is Affecting New Car Sales

The credit crunch is biting all around and everyone from supermarkets to airlines to car dealers are feeling the pulling in of belts and the loss of sales.
New cars are no exception. Many new cars are used as fleet cars or company cars, from the Lexus to the BMW, and those same companies are decreasing on their unnecessary spending budget and making the cars they have last another year or so in order to see how finances pan out. This hits the car dealers pretty hard.

The sale of new cars such as Lexus and Mercedes and even your average Ford are down by just over twenty per cent on last year's figures. Given that this is the time of year when new car sales are made up with the bulk of their annual sales thanks to the new registration plate, this is disappointing news and a little worrying. These are the worst sales figures in the motor industry in seventeen years.

Outlets orders to manufacturers have remained the same leading to a back log of vehicles stored at ports with no homes to go to as the expected space in the showrooms has not materialised. Of the drivers who can afford new cars, many are turning to the smaller, more economical version with lower tax expenses and more fuel efficiency. Of course, Lexus and BMW do eco-friendly versions but they still come with luxury car status and as such, they are accompanied by a luxury car price tag.

The blame for the lack of new car sales is being attributed to the current financial crisis and a lack of confidence in job security. This is making people reluctant to pay out for new cars unless they are absolutely necessary, but the good news is for those who can afford a new car. The chances of them getting a good deal right now when dealers are desperate for a sale are quite high.

More depressing news from the motoring world came in the form of car parts suppliers, LSUK, axing 600 workers after the business went into administration following a failed takeover. The company have 53 branches nationally and all workers have been issued with redundancy notices until a buy-out can be secured.

The motoring industry is looking to the government to ease the situation for new car dealers by capping the increases in vehicle excise duty along with other measures. The sale of new cars has been falling all year at a rate of 7.5 per cent over the last year but the chain of events in the world's finances has seen that dip to the twenty per cent drop that we now see.

Much of these sales drops that are currently being witnessed are with the larger car manufacturers, with the exception of Audi and Jaguar who enjoyed a slight increase. However, the Vauxhall Corsa turned out to be the best selling car followed closely by Fiesta, Astra, Focus and Golf's. So, it would seem that people really are opting for the smaller car.

Despite Jaguar and Ford not seeing so much of this downturn, they are still taking precautionary measures to cut back with the Ford Transit plant in Southampton being put on a four day week until further notice and Jaguar cutting back on the volumes they produce. This just goes to show that the economic problems are effecting industries other than banking and that we all need to keep a tighter grip on our money.