12.6.2008 Mini-sector sales rocket as fuel prices soar

Sales of small cars have bucked the general trend in May and have seen encouraging levels of growth, according to the latest Society of Motor Manufacturers and Trader’s report.

In the face of dwindling average sales across the UK motor industry (new car registrations were down on average 3.5% last month), manufactures of smaller cars such as Smart, Kia and Hyundai have experienced a strengthening of their market share.

The mini-sector as a whole saw a growth of 120% in May, and is up 27.4% over the year to date. Last month the newly launched Hyundai i10, which emits less than 120 gCO2/km, was the best seller in the segment. Other small car brands fared as follows: Smart (up 147%), Kia (up 36%), Hyundai (up 21%), Fiat (up 14%), and Nissan (up 9%).

In contrast, sales of 4x4s and luxury vehicles fell. As the price of filling up a tank has soared, registrations of so called ‘gas-guzzlers’ have started to drop-off. 4x4s on average fell 18% in May; Land Rover experienced a particularly dramatic slide, down 32% on April’s figures. Among the brands of larger cars: Daimler (down 50%), Porsche (down 37%), Land Rover (down 32%), Saab (down 31%), and Lexus (down 22%).

Growth in the diesel sector continued to rise, up 10.4% over the year-to-date, possibly indicating a growing awareness of CO2 emissions and the associated costs of vehicle taxation. However, sales of alternative fuel vehicles were down 8.3%, signifying that these changing trends are for the most part a result of rational economic decision-making, as opposed to a growing environmental concern.

The report highlights a clear shift in the priorities of UK car-buyers, who are increasingly seeing small cars as the economically viable option in a climate of financial uncertainty and rising fuel prices. UK trends are also mirrored in other countries; according to the Environmental Transport Association, America has seen a 30% drop in sales of their 4x4 equivalent the SUV. Sales of the symbolic ‘Hummer’ dropped by 27% in 2007, which has forced General Motors into announcing the closure of four SUV-manufacturing plants and a ‘strategic review’ of the brand.

A spokesperson for the Environmental Transport Association (ETA) said: "Like all fashions, the vogue for a particular type of car comes and goes, but the signs are that gas guzzling cars may have had their day. The future kings of the road are more likely to resemble India’s Tata Nano than 2-ton off-roaders."