Have emission standards hit the new car market?

With 2020 just around the corner, the future of the UK new car market looks bleak amidst economic and political uncertainty. The latest figures from the Society of Motor Manufacturers & Traders (SMMT) shows the new car market continued to decline with new registrations down 1.3 per cent year-on-year.

GlobalData’s Motor Finance journalist Athena Chrysanthou says: “While new car registrations declined by 1.3 per cent there was more interest in the second hand car market and also arguments of suppliers not meeting demand, as confirmed by Philip Nothard, customer insight and strategy director for Cox Automotive UK.

Nothard says: “The new car market has faced a number of challenges. If you look at 2018, WLTP [Worldwide Harmonised Light Vehicle Test Procedure- became live in] September that hit the UK and European market very heavily. It resulted in a very challenging fourth quarter in the new car market and a very challenging first quarter of 2019 in the new car market.

“You have got that alongside the political Brexit challenges, and that affects production, import, and export in the new car marketplace so it’s like double layer headwind.

“Any really large new vehicle dealer group who were with a manufacturer that was struggling with supply switched into used cars.”

Other than Brexit, Nothard believes that the corporate average fuel economy legislation (CAFÉ) coming into effect in January has affected the supply chain of new vehicles. The legislation means manufacturers will face a fine at the end of 2021 if they do not lower their average emission output to a certain level.

Nothard says: “The UK government and the European market have set these guidelines so what you have got for the new car market is the manufacturers are now trying to hold back all their lower emission vehicles. This is because they want them to go into next year and put forward their higher polluting vehicles into this year because therefore they have reduced their average per vehicle next year

“So it’s counter intuitive because you have got government telling consumers to buy lower emission vehicles, but the manufactures are holding those vehicles back because they want them to count next year not this year,” he concluded.