UK finishes 2013 as Europe's second-largest car market

UK car sales rose 11% last year; best result since 2007

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LONDON (Reuters) -- UK new-car sales rose 11 percent last year to the highest level since 2007, bucking a gloomy trend in most of the rest of Europe, the Society of Motor Manufacturers and Traders said today in a statement.

Registrations rose to 2.26 million units, exceeding the SMMT's forecast of 2.25 million for the year. The result consolidated the UK's position as the No. 2 market in Europe behind Germany and the only key regional market to grow consistently last year.

UK car sales have grown strongly in recent years, in a trend that pre-dated last year's rapid economic recovery. Attractive financing deals and stronger consumer confidence have helped lift deliveries.

Last month, UK sales rose 24 percent to 152,918, the 22nd successive month of increases.

Sales were helped by incentives in December, said Richard Lowe, head of retail and wholesale banking at Barclays. He predicted a similarly strong start to 2104, but "a slower and steadier rate of growth over the course of the year when compared to the dramatic growth seen in 2013."

The SMMT expects sales growth to be slower in 2014, with total sales close to 2013 levels.

''We expect new-car registrations to remain stable in 2014 as customers return to a more regular replacement cycle," Mike Hawes, SMMT CEO, said in today's statement.

This year, sustainable growth of about 1 percent over the year is expected in the UK, the SMMT said.

Car manufacturing in the UK will likely continue to increase, with the SMMT predicting that production will exceed the peak of 1.72 million cars reached in 1972 by 2017.

Production data, due on Jan. 23, will likely show that manufacturing exceeded 1.5 million units for the first time in six years in 2013.

Suppliers are starting to find it easier to get finance for investment, though skills shortages remain a constraint, Hawes said.

"To meet this healthy demand, manufacturers must secure their supply chain. There have already been moves to onshore more component production to reduce risk in this area,''Phil Harrold, automotive partner at PwC, said in a statement today.

Automotive News Europe contributed to this report

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