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Car sales 'fell sharply' in January

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Research has shown car sales saw a sharp decline in January, as the motor industry gears up to another challenging year.

Figures from the Society of Motor Manufacturers and Traders (SMMT) have shown that car sales dropped to 128,811 last month - a 11.5% decline year-on-year.

The loss of the car scrappage scheme, under which buyers get a discount on new cars for trading in older models, is understood to be a major factor behind the decline.

Older cars often suffer more breakdowns, leading to higher car insurance premiums, so buyers are eager to swap them with newer models.

The study also showed that eco-friendly cars with low carbon emission continue to become more popular, recording a 65% growth in their market share last month.

SMMT chief executive Paul Everitt predicted a tough year ahead for the UK motor industry.

He said: "Consumer confidence is low and it is important that Government uses the March Budget to help relieve some of the financial pressure on motorists by freezing fuel duty, while providing stability and certainty on motoring taxes.

"Despite the challenging conditions, the demand for low CO2 emitting and highly fuel-efficient cars continues to grow."

Moreover, the study showed new car registrations fell for the seventh month running as sales in January fell by 16,668.

Last month's 2.5% VAT hike and uncertainty looming over the economic recovery were also found to be important factors for the fall.

Total sales volumes are now forecast to fall by 5% this year, to 1.93 million.

© Press Association 2011