UK car sales jumped by a quarter last month despite the rising squeeze on household incomes, but economists forecast the improvement would be short-lived.
New registrations rose by 26% year-on-year to 134,344 units in October, the Society of Motor Manufacturers and Traders (SMMT) reported.
Sales were lifted by growing demand for hybrid (MHEV) cars, while the soon to be discontinued Ford Fiesta proved the most popular model followed by the Nissan Qashqai with the VW Golf completing the top three.
But despite this increase, the SMMT expects 2022 to be the worst year for car sales in four decades.
It said: “Ongoing supply chain shortages, surging inflation and a growing cost of living crisis have led to a -2.2% downward revision of the market outlook for the year, with 1.566 million registrations now anticipated.”
“This puts 2022 on course to be the market’s toughest year since 1982.”
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, suggested any improvement in new car sales would be short-lived.
“Looking ahead, they look set to remain below pre-Covid norms for at least the next 12 months.”
“For starters, consumers’ confidence remains on the floor,” she pointed out, adding “real disposable incomes will take a further battering in 2023, due to the watering down of government support for energy bills in April, austerity measures and higher unemployment”.
“In addition, the hit to households’ budgets from the staggering rise in mortgage rates will mean major purchases will be put on the back burner.”