Sales increase prompts car industry to predict 2.45 million cars will be sold

The Society of Motor Manufacturers and Traders had previously forecast sales would grow just over 6 per cent. But sales so far this year are already up by more than 10 per cent at 1.46 million, helped by economic confidence and cheap finance as Britain benefits from record-low interest rates.

New car registrations in July increased by 6.6 per cent from a year earlier to 172,907 units –slower growth than for the first half of the year as a whole, but stronger than June’s 6.2 per cent rise.

Up to four in five new car purchases are now made on credit, with many customers effectively renting a new car – typically for three years – before trading the vehicle in for a new model using a scheme known as a personal contract plan.

But the buoyant car market may be cooling as it enters the 29th month of consecutive growth since recovering from the 2008-09 financial crisis. Sales nosedived then, and the government intervened to support the industry with a scrappage scheme.

Car sales were one of the first areas of consumer demand to recover after the economic downturn.

Ford’s Fiesta supermini held on as Britain’s top-selling car, SMMT data showed, followed by its mid-sized Focus model and the Vauxhall Corsa.

Shares in Fiat fell more than 8.5 per cent yesterday to their lowest level this year, with traders citing concerns that investors who voted against the Italian carmaker’s merger with Chrysler would exercise their right to sell the stock, potentially jeopardising the tie-up.

Trading in the shares was halted by the Italian bourse on several occasions due to excessive volatility.