Big deals fail to boost new car sales

Latest figures show that new car sales continued to slump again in February - despite price cuts and plenty of deals available on new cars.

Society of Motor Manufacturers and Traders (SMMT) figures show that only 54,359 new cars were sold in last month, down 22 per cent or 15,251 cars on February 2008.

After months of falling sales there are now calls for a cash-for-scrap scheme that would see owners of older cars being offered a £2000 contribution towards a new car by the government. If approved, this incentive is likely to be offered with existing manufacturer promotions, which are currently better than ever. Similar schemes are in operation across Europe; last month the German market was up more than 21 per cent as car buyers took advantage of once-in-a-lifetime discounts.

Those without an older car to trade-in are being urged to buy now as prices are predicted to rise later in the year - once existing stocks at airfields and ports have been sold. With supply brought into line with demand through factory closures, manufacturers won't have to offer heavy discounts. Car makers that rely on cars that are produced abroad and imported into the UK - such as Ford - are warning that the low value of the pound may mean that they could soon raise prices again, just weeks after the last rise.

In contrast to the new market, used cars have been performing strongly since January. Dealers have reported another busy month and used values have started to rise slightly - especially on smaller, fuel-efficient models. Values of larger executive cars such as the BMW 5-Series and Audi A6 have begun to pick up after a big drop in 2008 with buyers realising they can buy a lot of car for their money. Prices of 4x4s are also increasing with renewed interest as people begin to realise some of them now present good value for money.