UK: analysts warn of stalled sales in the future image

The automotive industry in Great Britain is in great shape. The sales and production output have returned to levels only seen before the 2008-2009 crisis and the shabby recovery of the European region is nowhere in sight.

But industry experts and analysts warn the growth might not be sustainable – the UK market could soon reach saturation levels, while sales were artificially supported by lower than average credit rates. Buoyed by ingenious financing schemes, the UK sales have climbed for 29 straight months – a feat that hasn’t been achieved by the shabby European countries, only now recovering from a six-years slump in demand that led to 20 years record lows.

“Overall demand is beginning to stabilize,” warned Mike Hawes, the chief executive of the British Society of Motor Manufacturers and Traders.

“The British are . . . addicted to credit and addicted to buying cars on credit,” says Max Warburton, an analyst at Bernstein Research. “Trend analysis suggests that future market growth is likely to be limited,” he adds.

Because the overall economy is now growing and unemployment is rapidly declining, analysts speculate that the Bank of England will move to raise the interest rates, kept at a record low level of 0.5% since March 2009.

Via Financial Times