Carmakers pin hopes on British bright spot

Britain's figures are also flattered by a practice known as self-registration, whereby carmakers offer hefty discounts to persuade dealers to buy cars they know they won't be able to sell, register them themselves, and then sell them on later as nearly-new cars.

John Leech, head of accountancy firm KPMG's UK automotive group, estimated about half of last year's growth could be due to self-registration.

Leech estimated a car manufacturer offering plenty of zero percent finance deals to lure customers could be adding up to four percentage points of discount to the seven percent discount typically offered to a dealer on a mass-market car.

To protect the bottom line, carmakers are also hoping to persuade drivers that they would save money in the long term by buying a new, more fuel-efficient engine.

"If you go back 3-4 years ago consumers were more worried about environmental damage and wanted to be green," said KPMG's Leech, adding that expensive hybrids and electric cars are now out of vogue. "That concern has evaporated with the recession."

Fuel costs are a hot topic in Britain where tax rises and higher oil prices pushed the average cost of a tank of petrol to about 90 pounds in 2012 from 70 two years earlier. Newer engines can cut as much as 15 pounds off a fill-up.

The fuel efficiency pitch could boost sales of Ford's Focus and Fiesta, which run on its Ecoboost one litre engine, as well as the new Volkswagen Golf, Vauxhall's Adam and the new BMW 3-series and Mercedes A-Class.

Online attraction

Carmakers and dealers are also luring Internet-savvy British buyers by investing in social media buzz, websites and online tools to compare fuel and financing deals.

AutoTrader data shows that 10 years ago the average British consumer visited at least five dealerships before buying a car. With more research online, they now visit an average of two.

Ford and Nissan spend over a third of their UK marketing budget online, up from about 10 percent a few years ago, as more shopping is done on screens.

For all the pitches, car sales could skid off course if the UK economy continues to bump along the border of recession and knocks consumer confidence, which hit a 12-month high in January in terms of people's expectations about making a big purchase.

Already, Britons are stretching their average car ownership to four-and-a-half years from three-and-a-half years, according to sales group Auto Trader.

"If the UK falls back into recession, the doom and gloom surrounding that could really put a spanner in the works," motor dealer Jarvis said.

 

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