New car sales in the UK continued to rise last month as strong growth in businesses buying company vehicles outweighed falling demand from private buyers for a seventh month.

Economists focused on the latest deterioration in private car deals, warning that the figures suggest consumers are less willing to make big purchases.

A total of 180,168 new cars were registered in October, up 1.4% from a year earlier, according to the Society of Motor Manufacturers and Traders. Fleet car registrations drove the growth, up 4.2%, while sales to private buyers fell by 1.1% and have fallen every month since April.

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Many companies are likely to have made decisions about buying fleet cars before the outcome of the EU referendum, which means it will take some time before the impact of the Brexit vote can be assessed.

Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, said the data highlighted a “significant deterioration in consumers’ willingness to make major purchases”, with the recent fall in sterling further depressing demand by pushing up manufacturing costs which in turn pushes up prices. Most cars are imported, and those that are assembled here rely on components made abroad.

Private new car registrations in October were down 1.1% on the same month last year Private new car registrations in October were down 1.1% on the same month last year

He noted: “Recent increases in list prices by manufacturers in response to sterling’s depreciation, averaging about 2%, likely have contributed to depressing sales too. Manufacturers have warned that these increases are just the first step in their response to the lower pound.”

Ford, General Motors’ Vauxhall division and Nissan are among the carmakers that have hiked prices by 1.5% to 2% in the UK in response to the pound’s slump, according to Automotive News Europe. Only some of this has been passed on to consumers by car retailers, the official data suggests, and other increases have only come into effect in October, Tombs explained.

Car sales are likely to hold up for now given low interest rates and the abundance of cheap finance deals.

Car sales hit a record for the month of September of 469,696, up 1.6%, as buyers rushed to get the new 66 plate.

Sales are 2.5% ahead of 2015 in the year to date, with 2.3m vehicles hitting the road. Last year, sales hit a record of 2.63m and the SMMT predicts a new high of 2.68m cars this year.



The industry body is forecasting a drop of 5% for 2017.

Howard Archer, chief UK and European economist at IHS Markit, said: “The serious concern for the car sector going forward is that it looks inevitable that consumers’ purchasing power will progressively weaken over the coming months as inflation rises appreciably and earnings growth is muted – which will dilute consumers’ ability and likely willingness to splash out on big ticket items like cars.”

Hybrid and electric cars are still proving popular, with sales up 12.4% in October and 23% so far this year to 75,987 – the highest level ever achieved in the first 10 months of the year.

