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Motorists drive towards smaller, more fuel-efficient cars

The January sales figures have just been released from the Society of Motor Manufacturers and Traders (SMMT) and the upward trend continues. Carmakers in the UK sold 154,562 units in January, up 7.6% from the same month in 2013. The new figures represent the 23rd month of consecutive rises and follow on from the six year high in sales of 2013. A closer look at the sales figures, however, reveals an interesting move towards smaller and more fuel-efficient cars.

The January sales figures have just been released from the Society of Motor Manufacturers and Traders (SMMT) and the upward trend continues. Carmakers in the UK sold 154,562 units in January, up 7.6% from the same month in 2013. The new figures represent the 23rd month of consecutive rises and follow on from the six year high in sales of 2013. A closer look at the sales figures, however, reveals an interesting move towards smaller and more fuel-efficient cars. In the past, the family saloon dominated the sales charts, with cars like the Cortina, then Sierra and Mondeo leading the way for Ford and the Cavalier, Vectra and Insignia doing the same at Vauxhall.

Now, however, it is the Fiesta that dominates for Ford and it has been Britain’s best-selling car for four years, overtaking even the modestly sized Ford Focus. Vauxhall’s small Corsa was in third place and VW’s Golf and Polo cars followed into the top five. Indeed, the largest car in the top ten was the Nissan Qashqai, a modestly sized SUV crossover with a reputation for good fuel economy. Sales of hybrid cars jumped 25% on last year’s figures. The trend for smaller cars and fuel saving hybrid vehicles clearly reflects the consumers’ desire to save on their motoring costs and minimise the impact of fuel price rises.

SMMT chief executive, Mike Hawes, explains: "As fuel economy is a major consideration for many motorists, ongoing investment by vehicle manufacturers in innovative, fuel-efficient technology is a key factor in the growing demand for new cars. Looking ahead, the UK automotive industry expects to see moderate, sustainable growth in 2014."

A second striking factor behind the figures is the rise in private car sales. These sales were largely responsible for the overall sales increase, with a rise of 17% on last January. According to analysts, this shows an increase in consumer confidence, fuelled by a healthier job market, cheap finance and the availability of frugal little cars. The chief UK economist at IHS Global Insight, Howard Archer, said: "The motor industry will be hoping that recent robust UK economic activity is sustained and extended, and that this underpins consumer and business confidence, and their willingness to splash out on new cars.”

Mr Archer did, however, sound a note of caution. He pointed out that while wage rises remain below inflation, consumers will remain under financial pressure and eventually this would impact car sales. For growth to continue, inflation would have to be contained while wages rise, something that has so far not been apparent in the UK economy.

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