Page last updated at 13:31 GMT, Thursday, 5 June 2008 14:31 UK

Fuel costs 'favour smaller cars'

Hyundai I10
The release of the new Hyundai I10 boosted the mini category

High fuel prices and the threat of extra taxes on larger cars may be making smaller cars more popular, new car registration figures suggest.

The Society of Motor Manufacturers and Traders (SMMT) said 4x4 registrations fell 18% in May compared with May 2007.

Meanwhile, registrations of cars in the mini category, such as Hyundai I10 and Chevrolet Matiz, rose 120%.

Analysts caution against reading too much into one month's figures and sales of 4x4s have risen over the past year.

Also, the mini category is a relatively small one with only 2,912 of them registered in May, compared with 11,126 4x4s.

Some of the rise in sales of smaller cars can be attributed to the launch of the new Hyundai I10 during the month.

However, people buying new cars in May will have been aware of the government's plans to alter vehicle excise duty based on a car's emissions, as well as record petrol and diesel prices.

'Tough year'

The figures come against a backdrop of falling overall new car registrations.

According to the SMMT, registrations fell 3.5% in May compared with May 2007 and 0.6% in the year to the end of May.

It was the weakest May volume since 1999.

"The slowdown in the overall new car market in May comes as no surprise and reflects concerns across the economy," said Paul Everitt, chief executive of SMMT.

"We expect a tough year ahead."

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