CLAIMS that sales of new cars in Britain rose by 20% last month were

challenged by a leading motor trade economist yesterday who argued that

nearly half of that volume involved models registered by dealers to

achieve manufacturers' target bonuses.

Mr Neil Marshall, economic affairs director of the Retail Motor

Industry Federation, said: ''Things are improving, but not as high as

the 20% figure. It is closer to nine to 10% because of the disparity

between genuine sales and registrations which sit in forecourts looking

for second-hand buyers.''

He blamed the ''grossly distorted market'' on manufacturers, keen to

protect market share, who encourage dealers to hit targets and earn

volume incentives. As a result, the retailer is tempted to ''buy'' the

car from the car maker and then faces the problem of selling them on to

genuine buyers.

Mr Marshall also alleged that the company car buyer was being put

under pressure to speed up the cycle of fleet replacement and cited

examples of large banks being offered discounts up to 40% to replace

cars every four months instead of two years.

''Obviously this produces six times the previous volume turnover but

it floods the second-hand market, damages residual values, and

intensifies the cross subsidy from private buyers who pay greatly

inflated prices, compared to their heavily-discounted corporate

counterparts,'' Mr Marshall said.

His logic was supported by the case of top-of-the-range Ford

Granada/Scorpio estate cars sold late last year for a knockdown price of

#22,000 and now appearing as zero mileage offerings in dealers'

newspaper advertisements for #16,500.

He added: ''When the Monopolies and Mergers Commission took a look at

the industry, it found that 29% of the 1990 volume were direct sales, or

those made between manufacturers and fleets with high levels of

discount. There is no point in creating a false impression from figures

claiming double the real market improvement.''

Mr Marshall's opinions were in contrast to the Society of Motor

Manufacturers and Traders, whose chief executive Mr Ernie Thompson said

the 20% registration increase showed the industry was ''continuing in

recovery mode''.

Mr Thompson, until recently Ford's British sales director, said it was

the highest January total since 1990, at 198,525, but still fell well

short of the record 1989 equivalent of more than 220,000.

Whatever the realities of the British market's recovery, it has

sustained last year's growth, allowing British manufacturers to

compensate for lost European export business. Rover, acquired this week

by Munich-based BMW, continues to add volume -- up from 22,465 to 24,876

units last month.

Ford recovered market leadership from Vauxhall with 22% of cars

registered, the General Motors subsidiary trailing its arch rival by

nearly 4%.