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Rising fuel prices could influence UK car market

Not surprisingly, South Africa is not alone when it comes to the influence of higher fuel costs on car sales.
The current boom in UK diesel car sales could slow down, as the average price of diesel fuel at the end of June reached 132.27p (about R20,40) per litre - 22.5% higher than it was at the beginning of the year, according to figures from Experian, the global information services company.

The figures provided by Catalist, an Experian company, show the biggest increase in diesel fuel prices for the first six months of any year in the last decade.

The average price of petrol has also increased significantly to 118.9p (about R18,26) per litre - 15.4% higher at the end of June compared to the beginning of the year.

Furthermore, while both diesel and petrol prices have been rising, diesel prices have crept up at a faster rate over the last six months. There is now an 11.2% difference between petrol and diesel prices, compared to a 4.8% difference in January 2008.

Kirk Fletcher, Managing Director of Experian's Automotive division, said: “Sales of used diesel cars have continued to remain strong over the last few years and the threat of higher tax on the most polluting cars, plus the rising costs of running a car have played a part in the shift in car buying habits.

“As fuel prices continue to rise, it will be interesting to see how buying habits adapt this year. The sharp increase in petrol prices corresponds with a marked decline in sales of petrol run cars. On the other hand, sales of diesel used cars rose by 10.1% during the first three months of 2008.

“However, if diesel fuel prices continue to rise at this rate, we may see a slow down in the sale of diesel cars and a bigger shift over to cars that are running on alternative fuel. We are already seeing a rapid increase in the sale of hybrid cars, which were up by 93% during the first quarter of 2008 compared to the same period in 2007, and electric cars which increased by 415%*.”

*Used car sales statistics Q1 2008, Experian's MarketView Online
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