June UK car sales – decline continues as low emission sales falter

UK new car registrations declined for a fourth consecutive month in June, with year-on-year demand falling by -4.9 per cent to 223,421 units, according to the latest figures released by the Society of Motor Manufacturers and Traders (SMMT). 1,269,245 new cars joined British roads in the first half of the year, down -3.4 per cent as ongoing confusion over low emission zones and diesel, the removal of key ultra low emission vehicle incentives and an overall decline in buyer confidence affected the market.

Demand fell in all sectors, with private registrations seeing a decline of -4.8 per cent, while larger fleet and business registrations also fell, down -2.5 per cent and -37.1 per cent respectively. Declines were also seen across every vehicle segment, except Dual Purpose which grew 9.1 per cent in June and 7.3 per cent year-to-date to take 22.6 per cent of the market. However, Supermini remains the UK’s best-selling segment, making up 31.0 per cent of all registrations in the first six months.

The month saw growth for petrol and battery electric registrations, up 3.0 per cent and 61.7 per cent respectively, but this was not enough to offset the continuing decline of diesel, which fell for the 27th month in a row (-20.5 per cent). Significantly, plug-in hybrids continued the recent downward trend, falling by a massive -50.4 per cent, while hybrids also fell, by -4.7 per cent.

The performance tipped the overall alternatively fuelled vehicle (AFV) sector into negative growth for the first time since April 2017, undermining efforts to reduce emissions through fleet renewal of the latest ultra low emission vehicles. AFV registrations (BEV, PHEV, HEV) declined 11.8 per cent to 13,314 units in June. This is despite ongoing investment, which has enabled manufacturers to offer British car buyers more choice than ever before with more than 350 models now available in the UK – 44 of them plug-ins.

This technological innovation has led to a growing range of powertrain options, including advanced low emission petrols and diesels, and an ever-greater number of hybrid, plug-in hybrid, battery electric and hydrogen cars. Another option increasingly available is mild-hybrid technology, which provides an energy boost to traditional internal combustion engines, helping to improve fuel efficiency and lower CO2. To highlight these advances, SMMT’s monthly registrations data now includes a breakdown of the different technologies now being registered.1

Mike Hawes, SMMT chief executive, said: “Another month of decline is worrying but the fact that sales of alternatively fuelled cars are going into reverse is a grave concern. Manufacturers have invested billions to bring these vehicles to market but their efforts are now being undermined by confusing policies and the premature removal of purchase incentives.

“If we are to see widespread uptake of these vehicles, which are an essential part of a smooth transition to zero emission transport, we need world-class, long-term incentives and substantial investment in infrastructure.

“Fleet renewal remains the quickest way to address environmental concerns today and consumers should have the confidence – and support – to choose the new car that best meets their driving needs, whatever the technology, secure in the knowledge that it is safer and cleaner than ever before.”

‘Perfect Storm’

Jonathan Moss, partner and head of transport at legal firm DWF, highlights that the June SMMT car registrations figures call for long-term investment incentives and innovative plans to encourage the growth in alternative fuel transportation.

He said: “The UK new car market is down again in June. There is some respite with battery electric vehicles (“BEVs”) rising by 61.7 per cent but with BEV’s having only 1.1 per cent of market share, there is little reason to be cheerful. The alternatively fuelled vehicle (AFVs) sector fell into negative growth for the first time since April 2017.

“This is a perfect storm with the open sore of Brexit showing no sign of healing and the US – China trade war successfully suppressing car manufacturers’ appetite for growth. These figures are a dramatic call for long-term investment incentives and innovative plans to encourage the growth in alternative fuel transportation.”

Sue Robinson, director of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle retailers in the UK, said: “Sales of new cars declined in June as lack of clarity on a number of Government policies, including the current Brexit situation, is affecting not only private buyers but also businesses”

Robinson continued, “It is disappointing to see demand for alternative fuel vehicles decline, but it is positive that sales of pure electric vehicles maintained their positive trend despite significant supply constraints. Franchised dealers are making significant investments to be able to educate their customers and provide them with the best possible experience in this developing area of the market.

“The decline in fleet registrations is largely due to the confusion surrounding the Government’s company car tax regime. It is important that the Government addresses the negative impact the current tax regime is having on company cars.

“As uncertainty continues to have an effect on new car sales, used and nearly new cars, as well as aftersales, remain key areas of focus for franchised retailers”.