UK car market forecast to fall by 5% in 2011 after March drop

LONDON -- New-car sales in Britain fell 7.9 percent to 366,101 units on the year in March, the Society of Motor Manufacturers and Traders (SMMT) said on Wednesday.

Registrations were down by 8.7 percent to 558,336 over the first three months of the year and the 2011 market is forecast to drop by 5 percent to 1.93 million units, the SMMT said in its monthly sales update.

The market is expected to decline further in the second quarter before stabilizing and recovering in the second half of the year, the industry body added.

British consumers are being hit by higher taxes and rising inflation, while pay increases remain subdued and fears over job security as the government embarks on searing public spending cuts are reducing the willingness to spend on big-ticket items.

"The UK saw 366,101 new cars registered in March, demonstrating sustained demand in what is traditionally the biggest month of the year," SMMT CEO Paul Everitt said in a statement.

"Despite a dip versus 2010, the market remains on course to meet SMMT's forecast for the year with motorists buying increasingly fuel-efficient and low-emitting vehicles across every segment," he added.

The Ford Fiesta was the best-selling model in the month and over the first three months of the year.