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(Reuters/Darren Staples)

UK Car Sales Crash
September 8, 2008 | From

The list of evidence pointing to severe problems in the United Kingdom’s economy continues to grow. The latest news comes from the automotive sector. Consumers have jammed on the brakes and sales are skidding.

New car sales have crashed to the lowest level since 1966 as Britons cut back on making major purchases. Analysts say the disastrous sales numbers reflect the economic squeeze facing consumers and businesses. The number of registered fleets fell by 13.4 percent in August.

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: “August is one of the quietest months for the new car market, but this year it was the lowest since 1966 with only 63,225 registrations. The slowdown in the UK mirrors the difficult conditions being [experienced] across the main European markets.” According to Everitt, the number of new registrations will fall a further 10 percent by the end of the year.

The dismal plight of the automotive industry has analysts worried that the UK economy, which depends largely on consumer spending, could be in for severe trouble. Car sales falling to 1966 levels is just the latest example. Underscoring the severity of the decline is the fact that 42 years ago, the United Kingdom had 6 million fewer residents.

When consumer spending starts to contract, businesses follow suit, which results in job losses. If conditions persist, the economy runs the risk of entering a self-reinforcing cycle, where job losses fuel further consumption cutbacks and therefore place more stress on UK corporations.

With the economy slowing, all signs indicate the coming depression is going to be a big one.

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