UK car sales rise to 10-year monthly record in May

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LONDON (Reuters) -- UK car sales rose 7.7 percent in May to hit a 10-year record for the month, but future demand is likely to slow, the Society of Motor Manufacturers and Traders (SMMT) said today.

Registrations totaled 194,032 last month, the SMMT said in a statement, the highest sales figure for a May since 2004.

The SMMT said car sales have grown uninterrupted for 27 consecutive months -- the longest unbroken expansion since records began being keep in 1959.

Last month's increase was smaller than April's annual rise of 8.2 percent and March's 18 percent jump, leading the SMMT to forecast that sales growth will slow further.

"With SMMT forecasting an overall rise of around 6 percent over the year, the coming months should see some leveling off in growth rates as underlying demand stabilizes," SMMT CEO Mike Hawes said in the statement.

Car sales were one of the first areas of British consumer demand to recover after the financial crisis, with cheap financing a key factor behind demand.

"Looking ahead over the summer months it will be interesting to see ... [if the] growth rate drops down a gear. If there is a slowdown, all eyes will be on manufacturers and the actions they take to try to drive the market forward," said Richard Lowe, head of retail and wholesale at Barclays.

Ford's Fiesta subcompact remained the UK's top-selling car in May, but Ford's Focus compact dropped to fourth place, with Volkswagen's Golf and General Motors' Vauxhall Corsa taking the third and fourth spots, respectively.

In Europe’s other major markets, sales varied last month. New-car registrations in Germany, Europe's largest auto market, rose 5 percent in May, boosted by incentive-driven sales from carmakers including Opel and Citroen.

In France, sales edged up 0.1 percent, while in Spain they rose 17 percent, fueled by a government subsidy scheme aimed at increasing sales. In Italy, deliveries fell 4 percent.

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