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Could the new generation of thrift-cars revitalise new car sales?

In Britain, there exists a small selection of conversational topics capable of reducing large sections of the population – mild-mannered, reserved people most of the time – to indignant, incoherent rage in mere seconds. Any instance of animal cruelty, for example, or illegal immigration, or (worst of all) people who jump queues. And if you ever feel like causing a cataclysmic row amongst any three people aged 35 or over, a few alcoholic drinks and a passing mention of any politically important event of the 1980s is all you need to guarantee hours of fireworks (try it…the 1984-5 miners’ strike in particular never fails to liven things up).

In the last 15 years, however, it is safe to say that the rising costs associated with running a motor vehicle has taken its place at the very top of this list of subjects guaranteed to provoke a lengthy and heated diatribe, especially from drivers with a lengthy commute or whose occupation requires extensive periods in the car.

The reasons for ever-increasing fuel prices, road tax and insurance costs are numerous and complex, but a universally accepted truth is that the amount of money British drivers pay to HM Treasury, insurers and oil companies will continue to rise in coming years. Indeed, a recent survey from the AA showed that the average £71 spent on petrol each week by families with two children has exceeded the average amount spent on food for the first time. Although this is gloomy news for the roughly 40 million UK citizens that currently hold a driving licence, the emergence of a new generation of highly fuel-efficient and environmentally friendly cars means that shrewdly run dealerships can turn this situation to their advantage.

New car sales have plummeted since the worldwide economic crisis of 2008, and annual SMMT figures released in January show that new registrations fell to 1.94m in 2011 – a fall of 14% and the lowest figure since 1994’s 1.91m. Nevertheless, SMMT statistics also show that new car sales in the first quarter performed better than expected, largely driven by a demand for the superminis and small family cars that have fuel economy and a low road tax band as their primary selling points.

Superminis alone accounted for 37.7% of new car sales, showing that consumers are still willing to invest in new vehicles as long as they are rewarded with years of superior fuel consumption and low carbon emissions putting them in the A-C road tax band (which exempts them from paying any tax in the first year of ownership, and makes them liable for only £0-30 in subsequent years).

The growing number of astoundingly thrifty and clean new entrants to the market, from the Volkswagen Up! to the Skoda Citigo, presents franchised dealers with an excellent opportunity to win over customers for whom lengthier warranties and a choice over specifications are no longer sufficient reasons to pick a new car over a used one. Aggressive marketing of the long-term savings possible with super-economical new vehicles like these is therefore likely to result in excellent returns, through drawing the attention of a huge number of potential buyers keen to make the relentlessly rising cost of car ownership easier to bear.

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