UK new car market falls again in May

The UK new car market declined by -4.6 per cent in May with 183,724 units registered, according to figures released by the Society of Motor Manufacturers and Traders (SMMT). The fall reflects continued uncertainty over diesel and clean air zones as well as the removal of incentives for plug-in hybrid vehicles. Meanwhile, the underlying economic and political instability continues to affect consumer and business confidence.

Declines were recorded across all sales types in the month, with registrations by private consumers, fleets and business buyers declining by -5.0 per cent, -3.0 per cent and -29.0 per cent respectively. Most vehicle segments experienced a fall in demand, however, executive and dual purpose vehicles bucked the trend, with registrations growing 9.1 per cent and 16.0 per cent. While demand for superminis and small family cars fell, these vehicles remain the most popular taking a combined 56.3 per cent of the market.

Modest growth in registrations of petrol (1.0 per cent) and alternatively fuelled vehicles (11.7 per cent) was not enough to offset the significant decline in demand for diesels, which fell for the 26th consecutive month. Ongoing anti-diesel sentiment and the forthcoming introduction of low emission zones continues to affect buyer confidence.

However, thanks to significant industry investment in new technology, the latest diesels are safer and cleaner than ever before and will not face charges or restrictions anywhere in the UK.

Meanwhile, petrol electric hybrids experienced increased demand, up 34.6 per cent to 7,785 units. Battery electric cars also recorded a significant rise of 81.1 per cent yet this segment still only represented 1.1 per cent of the overall market. However, following recent trends, plug-in hybrids experienced another substantial decline, down -40.6 per cent in

May and -25.1 per cent year-to-date. This compares with a 36.2 per cent increase in the first five months of 2018 and is further evidence of the removal of the purchase incentive for PHEVs.

Mike Hawes, SMMT chief executive, said, “Confusing policy messages and changes to incentives continue to affect consumer and business confidence, causing drivers to keep hold of their older, more polluting vehicles for longer.

“New cars are safer, cleaner and more advanced than ever and, with sophisticated safety, efficiency and comfort features as well as a host of attractive deals on offer, there has never been a better time to invest in a new car.”

DWF, NFDA comment on May car registration figures

Commenting on the May SMMT figures, Jonathan Moss, partner and head of transport at global legal business DWF said: “Diesel car registration numbers in particular have seen the biggest drop (-18.3 per cent) owing to the widespread and on-going anti-diesel sentiment, which has developed in the face of policy and regulatory turmoil, and which has hindered business’ and consumer’s confidence across the board.  Despite this, diesel vehicles still represent a significant instrument towards meeting current environmental targets, being 15 per cent-20 per cent more efficient that their petrol equivalent, which, on the other hand, have seen a marginal increase in registration figures. These figures certainly put additional pressure on the government, as the slow decline in petrol vehicle registration is insufficient to meet ambitious CO2 emission targets.

“On the other hand, AFVs (Alternatively Fuelled Vehicles) continue to see a solid period of growth. Nevertheless, this growth is not sufficient to tip overall registration figures into overall growth. Policy makers need to devise much more aggressive incentives strategies, in order to make AFV vehicles significantly more affordable and appealing to customers who are impeded by the high price tags for the electric cars and electric hybrid vehicles.

“From an industry perspective, the current market also puts a significant strain on manufacturers, who are dealing with increasing pressure on carbon emission standards in the face of significant uncertainty and declining registrations numbers.”

The call for stability and clarity was echoed by Sue Robinson, Director of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle retailers in the UK. Robinson said:, “The continued decline in new vehicle sales reflects the current political and economic environment. Consumers will continue delaying decisions on major investments such as new vehicles until we have greater clarity.

“Pleasingly, despite the decline in new vehicle sales the used car market continues to perform strongly demonstrating that the consumer still has options when it comes to purchasing vehicles. Franchised retailers continue to benefit from the growing used vehicle market and the associated aftersales segment.

“We will continue to support franchised retailers through this unprecedented period of political uncertainty and continue to call on the government to provide clarity for the UK automotive sector.”