UK registration figures down in January as diesel market drops by a quarter

5 February 2018

UK new car registrations declined for the first month of 2018, as the year gets off to a shaky start following the first annual drop in figures for six years during 2017.

The figures released by the Society of Motor Manufacturers and Traders (SMMT) reveal that in January, 163,615 vehicles were driven off the country’s forecourts, a fall of 5.3% compared with the same month last year. This represents the 10th consecutive month of decline in the country’s market.

Demand fell across all sectors of the industry, with business registrations down 29.7%, fleet purchases falling 1.8% and private sales dropping 9.5%. Meanwhile, continuing trends seen towards the end of the year, the SUV market was the only vehicle segment to register growth, with demand up 6.6% and a market share of 20.2%. Demand in all other segments fell, with the biggest declines affecting the mini, MPV and executive segments.

In fuel segments, registrations of petrol vehicles rose by 8.5%, while alternatively fuelled vehicles (AFVs), including hybrid and electric, grew by 23.9%, albeit on smaller margins. However, these gains were not enough to cover a huge drop in diesel registrations, which were down by 25.6%. This is partially due to government policy on the fuel, and recent press demonisation of the issues surrounding emissions.

In April 2017, the country’s vehicle excise duty (VED) system was amended to remove favourable rates for diesel cars, while the UK Government announced in November last year that it will again amend rates for the first year of registration for all new diesel vehicles from April 2018.

To prove their worth, the SMMT has highlighted the importance of diesel cars and engines to the UK economy. Last year, more than two in five of the cars leaving British production lines were diesels, while manufacturers also produced more than 1 million engines, directly supporting some 3,350 jobs and, combined with the UK’s petrol engine output, delivering some £8.5 billion (€9.6 billion) to the economy.

SMMT chief executive Mike Hawes commented: ′The ongoing and substantial decline in new diesel car registrations is concerning, particularly since the evidence indicates consumers and businesses are not switching into alternative technologies, but keeping their older cars running. Given fleet renewal is the fastest way to improve air quality and reduce CO2, we need government policy to encourage take-up of the latest advanced low emission diesels as, for many drivers, they remain the right choice economically and environmentally.’

While the figures may appear startling, it is worth remembering that the first three months of 2017 saw unprecedented growth in the UK market. January is always considered to be a slow month for new car sales. However, the impending implementation of new VED rates meant sales were higher than average for the first three months of the year. January 2017 was up by 2.9% on 2016, which ended up being a record-breaking year for the country’s automotive industry. Compared to two years ago, January’s figures are down 3.6%.

Simon Benson, head of motoring services at breakdown firm the AA, added:  ′With the market now in its 10th month of decline, motorists are wary about purchasing a new vehicle. Only time will tell whether this trend will continue into March, marking a full year of falling sales. The government needs to act now to incentivise new car buyers back to forecourts before this decline causes real damage.’