New car registrations decline in the UK for a fourth consecutive month

04 August 2017

The UK car market saw a fourth successive month of decline in July as new figures released by the SMMT show a drop in registrations of 9.3%.

In total, 161,997 new cars were registered in the seventh month of the year, down from the 178,523 sold in July 2016. In total, for the first seven months of the year, the UK market is down 2.2% compared to the same period last year. The SMMT has said that this contraction is in line with forecasts, and comes as uncertainty over the Brexit process continues.

Demand was down across business, fleet and private buyers, with corresponding falls of 23.8%, 10.1% and 6.8%. More buyers opted for dual purpose and specialist sports cars in the month – the only two vehicle segments to enjoy growth, of 7.3% and 10.3% respectively.

Diesel sales reflected the current market trend, with sales falling 20.1% compared to July 2016 and with year-to-date sales down by 11%. Petrol sales fell by 3% and are currently up by 4.3% in year-to-date figures. Months of speculation about government policies on diesels have inevitably led to a softening of demand and slowed the market shift to the latest cleaner Euro 6 diesels which are valued by consumers for their fuel efficiency and lower CO2 emissions.

However, the demand for alternatively fuelled vehicles (AFVs) soared 64.9% as consumers continue to invest in the latest low-emission fuel technology. AFVs took a new record 5.5% market share in July, as 8,871 new units were driven off forecourts. Nearly 70,000 new AFVs have joined UK roads this year. For July 2017, 860 new pure-electric vehicles were registered, with 2,643 plug-in hybrids and 5,367 hybrids.

The year-to-date overall performance remains at a high level though thanks to a strong first quarter – with more than 1.5 million new cars registered on UK roads since January.

Mike Hawes, SMMT chief executive, comments: ′The fall in consumer and business confidence is having a knock on effect on demand in the new car market and government must act quickly to provide concrete plans regarding Brexit. While it’s encouraging to see record achievements for alternatively fuelled vehicles, consumers considering other fuel types will have undoubtedly been affected by the uncertainty surrounding the government’s clean air plans. It is important to remember that there are no plans to charge drivers using the latest Euro 6 models and no proposed bans for conventional petrol and diesel vehicles for some 23 years. The lower demand in recent months will inevitably mean competition from manufacturers will intensify and it will be a good opportunity for consumers to get a great deal on their next car, with many exciting new models launched in the coming months.’

While uncertainty over Brexit is a potential cause of poor sales, there is also plenty of poor media coverage over finance deals, which may be putting consumers off. Graham Hill, car finance expert at the National Association of Commercial Finance Brokers, adds: ′For the fourth consecutive month, the new car market has stuttered as Brexit uncertainty continues to weigh heavily on consumers and businesses alike. While some of this cooling can be attributed to the rush to beat the changes to car tax in April, there’s a wider issue here.

′The ongoing negative, and often damagingly incorrect, narrative around car finance – specifically Personal Contract Purchase (PCP) plans – is clearly deterring consumers from buying new cars. While there is an issue in how some of these car finance plans have been sold to consumers, the products themselves are robust and responsible routes to car ownership. In turn, this could be driving consumers towards older second-hand vehicles that they can buy outright – which could impact much-needed investment in the sector, and see the government’s clean vehicle push turned on its head.

′While a record market share for AFVs is encouraging, the used car data which is due out later this month will give a fuller picture of whether this damaging narrative around PCPs is going to have a lasting effect.’