UK car sales fall for the second year in a row as Brexit uncertainty dampens demand

 
Joe Curtis
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UK car sales are predicted to fall by two per cent in 2019 (Source: Getty)

UK car sales have fallen for the second year running, according to figures from an industry trade body released today.


Dealerships sold 2.37m new cars in 2018, 6.8 per cent fewer than it managed in 2017, and 12 per cent below 2016’s peak of 2.69m, The Society of Motor Manufacturers and Traders (SMMT) said.

The fleet sector was hit worst, with new vehicle registrations falling by 7.3 per cent, but both private and small business registrations were impacted, with declines of 6.4 per cent and 5.6 per cent respectively.

"Even allowing for uncertainty over government policy on diesel cars affecting fleet sales, it appears that that several businesses have been reluctant to replace or add to their fleets amid a cloudy economic outlook fuelled by Brexit uncertainties," said Howard Archer, chief economic adviser to the EY Item Club.

Diesel car sales tumbled by a whopping 30 per cent as drivers reacted to potential restrictions on diesel engines, with December marking its 21st consecutive month of decline.


But the shift away from diesel, as well as a higher number of 4x4 vehicle sales, meant CO2 emissions rose.

SMMT chief executive Mike Hawes blamed Brexit uncertainty for quashing consumer confidence, saying it was one of a number of reasons for the latest decline.

“Everyone recognises that Brexit is an existential threat to the UK automotive industry and we hope a practical solution will prevail," he told Reuters.

"A second year of substantial decline is a major concern, as falling consumer confidence, confusing fiscal and policy messages and shortages due to regulatory changes have combined to create a highly turbulent market," he added.

Other contributory factors included new fuel consumption and emissions regulations.

Hawes also pointed to an apparent contrast in government policy over car emissions, with the Department for Transport’s “road to zero” strategy seemingly at odds with chancellor Philip Hammond’s decision to scrap a hybrid car subsidy.

Pure electric car production rose to 15,000 units, the Independent reported, a rise of around one-fifth, but overall proving a minimal contribution to new car sales.

"The industry is facing ever-tougher environmental targets against a backdrop of political and economic uncertainty that is weakening demand so these figures should act as a wake-up call for policy makers. Supportive, not punitive measures are needed to grow sales," Hawes said.

However, the SMMT predicts that car sales will fall by just two per cent in 2019 under an orderly Brexit.

Ian Gilmartin, head of retail and wholesale at Barclays Corporate Banking, said today's figures should serve as a reminder to policymakers of the "urgent need" to support the UK's car industry.

"It’s not time to panic and worth remembering that in absolute terms sales are still way ahead of the nadir we hit at the start of the decade," he said.

"Manufacturers and retailers are making positive steps to try to innovate and adapt to the changing landscape, in particular through the development of new alternatively fuelled models.

"But they can’t do it all on their own – they need support from the government to encourage more new vehicle purchases and allow the industry to thrive this year."

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