UK car sales rise in October but consumer demand slumps again

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LONDON, Nov 4 (Reuters) - British new car registrations rose marginally last month, an industry body said on Friday, with an increase in businesses buying fleet cars offsetting a slump in demand among individual consumers for the seventh month in a row.

Sales rose 1.4 percent to 180,168 vehicles in October, the Society of Motor Manufacturers and Traders said, driven by strong demand by firms.

However many of the registrations logged for companies since the June 23 referendum will have resulted from purchasing decisions made beforehand, making it hard to assess the long-term effect of the vote on the biggest proportion of the market.

Sales to individual buyers have fallen in every month since April, suggesting that the uncertainty created by the vote and the decision to leave the European Union may have hit sentiment among consumers in Europe's second biggest car market.

Demand was down 1.1 percent in October.

British car sales hit a record high of 2.63 million cars last year, spurred on by low interest rates and cheap finance deals. The SMMT predicts registrations will rise again in 2016 to 2.68 million cars.

But the industry body forecasts a drop of around 5 percent next year with others predicting larger falls.

Howard Archer, an economist with IHS Global Insight, said that demand could be hit due to a squeeze on disposable income caused by the fall in the value of sterling pushing up the price of imported goods.

"It looks inevitable that consumers' purchasing power will progressively weaken over the coming months... which will dilute consumers' ability and likely willingness to splash out on big ticket items like cars," he said. (Reporting by Costas Pitas; Editing by Keith Weir)