As the current economic slowdown forces families to slim down their fleets, run cars into the ground and drive tanks dry, Stephen Christie looks at an industry in turmoil to find out if any driver is immune from the gloom

Travelling bumpy road

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There is no doubt about it – now is not the best time to be a car owner.

Yesterday alone saw the release of two new sets of figures which both made far from pleasant reading for motorists.

That, combined with a stark warning from a leading industry chief, painted a bleak picture of what drivers now face.

According to one poll, the credit crunch is causing car owners to consider reducing the number of vehicles they have in the household.

And, according to Esure Car Insurance, rising motoring costs are forcing people to hold on to their existing vehicle for longer.

But that’s not the end of it.

Motoring organisation like the RAC claims motorists in the UK are now paying an average of 19% more to keep their cars on the road compared with last year.

The figures were released on a day when the president of General Motors Europe, Carl-Peter Forster, claimed high oil and energy prices are hitting the middle classes “to the bone” with confusion over environmental policy “paralysing” drivers’ purchasing decisions.

Mr Forster’s comments were made as car manufacturers showcased their latest products at the Paris Motor Show against the backdrop of what he described as “unprecedented economic challenges”.

Mr Forster said: “The deteriorating value of the British pound, compared with the Euro, is hurting sales. We actually sell more vehicles in the UK than we build there, and the weak buying power of the pound has put a new car purchase beyond the reach of many people who might otherwise be in the market right now.

“We are hearing announcements from automobile manufacturers, and our critically-important suppliers, that weak sales are driving cutbacks and plant closings, and I'm afraid there will be many more announcements in the weeks ahead.”

Mr Forster also called for “clear, transparent European-wide environmental policies and laws” to help end the uncertainty he believed was undermining consumer confidence.

This “uncertainty” is borne out by data collected in Esure’s drivers’ poll.

Of the 1,006 adults surveyed by the insurance firm, 48% said they were thinking about dropping to just one vehicle per household.

Nearly 75% of the people polled said they were resisting the urge to buy a new vehicle so they could save money, with 58% of all those questioned citing the economic slump as a reason for keeping their car longer.

Esure’s head of risk Mike Pickard said he was not surprised by the results.

“With the combined effect of rising motoring costs, high fuel prices and the credit crunch adding strain on motorists’ pockets, it comes as no surprise that UK drivers are opting to reduce the number of vehicles they own,” he added.

“The fact that they’re also keeping their cars for longer is proof that drivers are becoming increasingly conscious of keeping motoring costs down.”

RAC’s latest figures also fail to brighten up the motoring landscape, with its Cost of Motoring Index 2008 adding to the gloom.

Annual running costs for an average family car have now soared to £2,435, which is a year-on-year increase of £277.

According to the AA, one in five motorists has recently run out of fuel or driven on fumes, with more than a fifth saying this was because a £20 or £30 refill does not go as far as it did.

Despite all the doom and gloom, Europe’s energy capital appears to be one place that manages to maintain strong sales in the face of a looming recession.

Athol Strachan, managing director at Aberdeen-based Town and County, which has Land Rover and Porsche franchises, said sales had “held up well” in September. “We surpassed our target for Land Rover,” he added.

“All vehicles in the range have been selling well. The local market for these seems to be very strong.”

Mr Strachan said Porsche models were also selling as well as ever, with no sign of any loss of interest from wealthier car buyers around the north-east amid the current turmoil.

Arthur McKenzie, sales manager at Arnold Clark’s Lexus dealership in Aberdeen, said current sales were at a similar level to last year.

He added: “We are not seeing any signs of a downturn. There are still plenty of cash-heavy customers around the north-east.”

Lexus models range in price from £23,000 to £81,000 for the latest flagship hybrid vehicle.

And Steve Arthur, sales manager at Stratstone’s Jaguar showroom in Aberdeen, said demand was as strong as ever.

“Sales are quite healthy just now,” he said, adding that business was up this year following the debut of Jaguar’s new XF model.

The Jaguar dealership has even outperformed most of the rest of the UK-wide Stratstone chain this year – suggesting Aberdeen has been punching above its weight in selling prestige cars.

Mr Arthur said five top-of-the-range Jaguars, worth £70,000 each, had been sold by the showroom in the last month alone.

Aberdeen-based Mercedes Benz dealer John Weir reported no let-up in demand for higher-value cars.

“There seems to be a little micro-market operating in Aberdeen,” he said, adding: “The average car specification is higher than in the rest of Scotland, which must be a reflection of the wealth in the local market.”

Mr Weir said there had been no fall-off in interest in Mercedes, although there had been “some adjustment” – customers showing a preference for diesel models and smaller engine sizes.

But John Clark, who owns Aberdeen-based John Clark Motor Group (JCMG), said dealerships across the UK were feeling the impact of a slowdown in consumer spending and, despite its relative prosperity, the Granite City was not immune.

JCMG – whose dealerships sell Audis, BMWs, Volkswagens, Seats and Skodas – has seen a marked fall in new car sales since June.

But Mr Clark said the group had been doing relatively well in comparison to the wider Scottish market for new cars, which has seen a 6.3% drop in sales this year.

It has also emerged that one of the UK’s most prestigious car manufacturers is recognising Aberdeen as one of its key areas for growth and opportunity. Bentley Edinburgh’s brand manager Gavin Paterson said the area continues to provide “exciting” opportunities despite the current economic crisis.

He said: “I look forward to building and strengthening relationships in the area. The Aberdeen economy continues to be strong and we continue to recognise that there is a real opportunity for us to showcase our range of cars in the region.”

Official figures, due out next week, are expected to show a big dip in UK new car sales for September compared with the same month last year.