Brexit and ‘Beast from the East’ among reasons for latest drop in UK new car sales, say experts

Time 4:34 pm, April 5, 2018

INDUSTRY experts have blamed the latest drop in new car sales on various factors, including changes to vehicle excise duty and disruption caused by the ‘Beast from the East’.

The continued effect of Brexit and a lack of clarity over the government’s policy on diesel cars were also said to be why there was a 15.7 per cent year-on-year fall in March, as revealed today by industry body the Society of Motor Manufacturers and Traders (SMMT) and reported by Car Dealer Magazine.

Despite the introduction of a new plate – which usually gives sales a boost – the market’s downward trend continued, marking a year of decline.

Ian Plummer, manufacturing and agency director at Auto Trader, said: ‘New car sales were hit by a triple whammy in the first quarter of the year.

‘First, Q1 of 2017 was always going to be a hard act to follow because sales were artificially inflated by consumers pulling forward purchases ahead of changes to vehicle excise duty.

‘Second, we had several days of Arctic weather and this impacted on deliveries to dealers and deterred consumers from visiting showrooms.

‘And third, there was the ongoing negative impact of Brexit. Not only has it severely dented consumer confidence, but falling exchange rates have reduced the scope for manufacturers to entice consumers with strong offers, due to the impact of a falling pound on the profitability of cars sold in the UK.’

Chris Bosworth, director of strategy at Close Brothers Motor Finance, said: ‘Today’s figures come as a disappointment. Traditionally, March is a popular month to buy vehicles, as the new number plates are out, and this month’s figures should have been boosted by a spike in demand before the new vehicle excise duty changes set in.

‘That said, petrol and alternative fuels remain the heroes of the forecourts, with diesel suffering and seeing yet another month of decline.

‘As we begin the one-year countdown to Brexit, we expect turbulence in the sector to continue, but dealers are not powerless to adapt. They need to be willing and able to offer the most appropriate finance and stock to their customers, whether that’s diesel, petrol, or electric.’

Ian Gilmartin, head of retail and wholesale at Barclays Corporate Banking, said: ‘There’s no disguising the fact that it’s another disappointing month for the new car sector. Achieving strong sales when new-plate models hit the road is central to most sellers’ overall strategy, so there will be some concern at the continued slump revealed in these figures.

‘However, the comparison with last March is a little misleading, as the record result posted then was in part due to sales being brought forward ahead of tax changes that came into place in April 2017. Some of the fall can also be attributed to a prolonged natural correction following a bumper couple of years, which we always knew was going to be unsustainable in the long run.’

James Hind, chief executive of Carwow, said: ‘Perhaps unsurprisingly, March has seen the market downturn continue as consumers’ reluctance to change their cars persists and as confusion over the long-term future of diesel reigns supreme in the minds of would-be car buyers.

‘As consumer confidence in diesel continues to plunge, the industry needs the government to inject consumer confidence by offering clarity on the future of diesel, and by comprehensively laying down their plans for the £400m promised for electric infrastructure in last year’s Budget.

‘That way, the 18 per cent of drivers we know are interested in buying an electric in the next two years finally have the confidence to make the change, knowing that there are enough public charging points to support their choice.

‘Manufacturers are investing hard to turn the trend but their efforts continue to be thwarted by continued government-led confusion. It’s time for change.’

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Car Dealer has been covering the motor trade since 2008 as both a print and digital publication. In 2020 the title went fully digital and now provides daily motoring updates on this website for the car industry. A digital magazine is published once a month.

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