New car registrations are booming in Britain, driven by a surge in demand from private buyers through franchised dealers as average prices continue to fall.

According to the latest Alliance and Leicester Car Price Index, prices fell 7.9% in May, confirming a two-year downward trend against a total sales rise of 3% since the start of 2001.

The statistics suggest public confidence in the franchised dealer network is returning : 516,901 cars were sold in the first five months of the year, compared with 437,864 units in the same period of 2000 – a rise of 18%.

Society of Motor Manufacturers and Traders chief executive Christopher Macgowan said: “Consumers are not stupid. They know how and where to get the best deal.

“As prices continue to fall, UK franchised dealers are clearly the favoured option for most people. The local franchise offers extremely competitive prices, with the added peace of mind that comes from strong aftersales support.

“This is clearly what sophisticated consumers want.”

New car registrations by private buyers from January to May accounted for more than 49% of total sales, compared with 43% last year. The forecast for total new car registrations in 2001 is 2.25 million units.