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CAR DEALERS HOPE 58 PLATE WILL UP SALES

The embattled car industry will be hoping the launch of this month's new car registration plate can drive a recovery in demand after the weakest August for new motor sales since 1966.

But as hard-pressed consumers become increasingly reluctant to splash their cash, there are fears that not even the new '58' plate will halt the slide.

Latest figures from the Society of Motor Manufacturers and Traders (SMMT) revealed that sales of new cars slumped 18.6% year-on-year to 63,225 last month as rocketing fuel prices, road tax and the economic slowdown took its toll.

The group now expects the all-important new plate sales in September - a month that accounts for 17% to 18% of the entire year's new car registrations - to drop by around 7.5% in a sign of deepening gloom for the motor trade.

Both used and new car markets are now feeling the effects of the belt tightening, as recent results from the sector reveal. Nottinghamshire-based dealership Pendragon said it had seen the biggest single monthly reduction in used car prices for five years in June. The news came as it reported a 60% plunge in annual pre-tax profits.

Lookers of Manchester also offered a grim picture of trade as the dealership said new and used car sales dropped by 6.5% and 5% respectively in the first six months of the year.

The sector has been hit from all angles, with the accelerating downturn in the economy compounding an already weakened market thanks to rising fuel and tax costs and years of falling prices.

Manufacturers had been able to briefly halt the sales decline earlier this year with a raft of generous 0% finance deals to lure in buyers. However, they soon pulled the offers as margins came even further under pressure with the falling value of the pound, leaving the first quarter rebound now a distant memory.

Shares in listed dealerships have careered to rock bottom levels as sales have dived, with Pendragon now down 83% over the past year, Lookers down 60% and Inchcape off 45%.

Motor market analyst Michael Vassallo of Brewin Dolphin said the dramatic fall in August gave grave cause for concern. "Maybe some demand is being pent up for September, but realistically this always happens and therefore the extent of the fall is worrying."



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