Cars sales in the UK are poised to fall over the next two years after 2004's near record-breaking performance, according to the Society of Motor Manufacturers and Traders.
New car registrations reached 2,567,269 in 2004 - only 11,781 down on the previous year's record. But the SMMT is forecasting that sales will fall by more than 100,000 this year and by a further 65,000 in 2006.
If the SMMT's estimate proves correct, this year will be the worst on garage forecourts since 2001. The SMMT's chief executive, Christopher Macgowan, described the organisation's forecast for this year, within the context of the past decade, as "robust".
"Nevertheless, our expectations point to a slightly weaker market than in recent years - a reflection that the automotive industry is not immune to the competitive pressures affecting other sectors," he added.
Last year's slight dip in sales came despite a strong start to 2004 and record sales to the fleet and business sectors. But a combination of rising interest rates and reports of a cooling housing market took its toll on the private sector where sales fell by more than 4% to just over 1.2m vehicles.
As well as falling sales manufacturers and dealers are likely to face increasing pressure on their margins as they try to pass on increases in steel prices against a backdrop of consumer caution.
However Keith Parry, head of the motor retail group at Barclays Business Banking, argues that "it's not time to panic" for the motor industry.
Barclays is predicting UK car sales of 2.424m, slightly below the SMMT level. "This is still a strong market. While our expectations for the private sector in 2005 point to a slightly weaker market than in recent years we expect a lot of interest to be shown in the introduction of a number of new car models during the course of the year."
Consumer confidence may also improve if, as expected, interest rates are at or close to their peak, he said.
Ford continued to produce the UK's best seller with the Focus extending the unbroken run of a Ford model in the top slot which dates back to the Cortina in 1972.
Specialist sports cars, off-road sports utility vehicles and people carriers were among the year's winners with all showing volume gains in double figures. Overall they now account for almost 15% of the UK market. Small cars did less well. The mini class - which confusingly does not include the Oxford-built Mini - but which takes in small cars with engines of 1 litre or less saw sales slip by just over 7%. Sales of models in the supermini class, which have engines between 1 and 1.4 litres, fell almost 4%.
Diesel engines continued to extend their popularity, taking about a third of the market.
Statistically the year's biggest winner was Bentley with UK sales up from just over 200 to almost 2,000. A Bentley spokeswoman said 2003 had seen the discontinuation of the old Azure model while 2004 had benefited from full production of the marque's top-selling Continental GT. She added that the company was not chasing volume. "We are about exclusivity. We are not planning to challenge the Big Three [GM, Ford and DaimlerChrysler]."
