UK car purchases reached a 12-year high in January as the alternative fuel segment jumped to a record market share.
Year-on-year growth hit 2.9 per cent in the month, with 174,564 new purchases, according to the Society of Motor Manufacturers and Traders (SMMT).
Car-buyers eschewed diesel vehicles as increased concerns over air pollution continue to push people away from the heavier fuel. Yet while diesel sales fell by 4.3 per cent, alternative fuel sales (including electric vehicles and compressed natural gas) boomed by 19.9 per cent to reach a 4.2 per cent market share.
Petrol cars still dominate the industry, with an 8.9 per cent rise in sales meaning more than half of vehicles sold in the UK in January were petrol-fueled.
|Mkt share '17||45.1%||50.7%||4.2%|
|Mkt share '16||48.5%||47.9%||3.6%|
Sales of cars sustained strong levels during 2016, with a record 2.69m registrations. However, price increases from the fall in sterling after the Brexit vote are expected to weigh on the car market over the coming months, with real earnings set to decline on average for Britons.
Richard Jones, managing director of motor finance provider Black Horse, said: “It’s almost inevitable that record levels will cool at some point, particularly against a backdrop of potential rise car prices due to the weakness of the pound and possible implications of Brexit.”
Big ticket purchases such as car sales are also vulnerable to changes in consumer sentiment. UK households have remained confident since the Brexit vote, but economists for the most part expect spending to fall as prices rise.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The recent decline in consumer confidence points to weaker car sales ahead. The rising cost of motoring also will dissuade consumers from making purchases.”