Warning over potential oversupply

Leading industry figures have raised fears that favourable exchange rates could lead to oversupply as manufacturers offload surplus production in the UK.

There may be a significant rise in pre-registration activity in the UK car market towards the end of 2012 and Glass's managing editor Adrian Rushmore believes it could lead to oversupply.

Manheim Remarketing's managing director Mike Pilkington also expressed concern the Society of Motor Manufacturers and Traders (SMMT) figures don't tell the full story and that oversupply could also drive down used car values.

"It's been a matter of some debate that, with the tough market in Europe and change in the exchange rates, the SMMT figures belie a flat retail market and growth is actually around new cars being forced into the dealer network," he said.

"Over recent months retailers have been complaining of more pressure to take vehicles for other than genuine customer needs."

The concerns surround exchange rates favouring the pound and causing car firms to force unsold surplus cars into the UK market as sales across Europe struggle.

But SMMT chief executive Paul Everitt thinks the activity in the retail sector is genuine, with figures showing new car registrations up by almost 9% year-on-year.

Copyright Press Association 2012

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