9:14 am, January 7, 2019
UK car sales have fallen by 6.8 per cent in 2018 compared with the previous 12 months – the fastest drop since the global financial crisis 10 years ago.
Industry trade body the Society of Motor Manufacturers and Traders (SMMT) announced this morning that a total of 2.37 million cars had been registered in 2018 – the second consecutive year of decline.
New car sales were hit by the falling demand for diesel cars, with registrations for this fuel type down 30 per cent, as well as stricter emissions testing, which held up deliveries, and Brexit worries.
Petrol car registrations were up nine per cent, however, and alternatively fuelled vehicles (AFVs) rose by 21 per cent.
SMMT chief executive Mike Hawes described 2018 as ‘highly turbulent’, but insisted sales were ‘on a par’ with the average over the past 10 to 15 years. He warned that a drop in consumer confidence linked to Brexit, concern about diesels and the impact of a new testing regime were all having a negative impact on the market.
He said: ‘A second year of substantial decline is a major concern, as falling consumer confidence, confusing fiscal and policy messages and shortages due to regulatory changes have combined to create a highly turbulent market. The industry is facing ever-tougher environmental targets against a backdrop of political and economic uncertainty that is weakening demand, so these figures should act as a wake-up call for policy-makers.
‘Supportive, not punitive, measures are needed to grow sales, because replacing older cars with new technologies, whether diesel, petrol, hybrid or plug-in, is good for the environment, the consumer, the industry and the exchequer.’
Sales of new cars in UK. Infographic by PA Graphics.
Hawes added: ‘Despite the overall decline in 2018, demand for new cars in the UK remains solid, with volumes on a par with the preceding 15-year average and the market still the second biggest in the EU, behind Germany. It is also one of the most diverse, with buyers able to choose from some 350 different models available in fuel types and body styles to suit all driving needs.
‘Meanwhile, more than 80 exciting new-generation models – 31 of them plug-in electrics – are set to make their showroom debuts in 2019, and with some compelling deals on offer, the industry is continuing to invest to grow the market despite the headwinds.’
Reactions to new car registrations in 2018
Auto Trader director Ian Plummer commented: ‘Despite what’s been a year of unprecedented challenges for the industry, 2018 closed in relatively good health. And whilst the same issues will still be felt during the months ahead, 2019 holds some significant bright spots for retailers, manufacturers and consumers alike.
‘Due to March’s highly desirable plate change, the first three months of the year represent almost a third of the industry’s total annual sales, and are therefore key to a successful year for any brand or retailer. However, with Brexit looming, brands will be facing even greater pressure to hit the ground running in 2019 to offset any potential shortfall following the UK’s withdrawal from the EU.’
He added; ‘Coupled with the need to make up for the loss of sales following the introduction of the Worldwide Harmonised Light Vehicles Test Procedure (WLTP) in September, there should be some great bargains for car-buyers over the coming weeks.
‘Over the last 12 months we’ve seen some trends emerge which are set to accelerate in 2019, not least the growing consumer appetite for alternatively fuelled vehicles, which has come largely at the expense of diesels.
‘Mirroring their actual sales growth in the new car market, we saw AFVs reach a record seven per cent of all fuel-related searches on our marketplace in December. Similarly, the average price of a used AFV climbed to £20,828 in November – the highest rate recorded.’
CEO of Carwow James Hind said: ‘Brexit paralysed the motoring market in 2018 as manufacturers, dealers and consumers all tried to prepare for what comes next. This has left the industry very vulnerable as we enter 2019.
‘Brexit is just the latest challenge for an industry already trying to recover from changes to emissions rules and dieselgate.
‘However, for consumers, the first quarter of 2019 is going to be a great time to buy a brand-new car because of Brexit. As we start the new year, manufacturers are lining up with new offers and finance packages, keen to make the most of consumer appetite as the Brexit deadline approaches. Many, including Seat, Skoda, Honda and Vauxhall have January-only offers in order to kick-start the year and put 2018 behind them.
‘At Carwow, our research among car buyers has shown there is a distinct lack of certainty, in particular around the future of traditionally fuelled cars, and this is increasingly evident in the behaviour we are seeing on our website. Searches for diesel cars have fallen by eight per cent, while interest in alternatively fuelled cars is up, hybrids increased by nine per cent and electrics are up by 44 per cent year-on-year.’
Director of sales at Close Brothers Motor Finance Seán Kemple said: ‘New car sales continue to come under fire as the industry is hit by a global slowdown, confusion over fuel types and uncertainty about the effects of Brexit.
‘Brexit is absolutely having an impact on consumer confidence, and we can see that in these car sales. The priority for now is to hope that the government’s withdrawal agreement delivers some clarity upon which we can start to move forward. However, we still have confusion in the marketplace from fuel types to finance options, which will continue to exist once Brexit is out of the way.
‘During this extended period of uncertainty, dealers are best placed to be a source of expertise and reassurance to customers. If they hope to bolster their bottom lines, they must seize this opportunity with both hands as we move into 2019.’
James Fairclough, CEO of AA Cars, said: ‘The number of new vehicle registrations remains high, and Britain’s new car market is still one of the largest in Europe, with more than 2.3 million people purchasing a new car in 2018.
‘Seen in that context, December’s low figures are consistent with a seasonal slowdown and there are grounds for a cautious optimism about what 2019 will bring for the market.
‘Perhaps the most positive take from today’s data is that demand for alternatively fuelled vehicles (AFV) accelerated throughout 2018, reaching a new record of 6.2 per cent share of the market as consumers become more environmentally conscious.
‘A record number of plug-in hybrid, hybrid, battery electric and hydrogen fuel cell cars were registered making Britain a key market for AFVs.’
Sue Robinson, director of the National Franchised Dealers Association (NFDA), added: ‘The substantial growth of the plug-in electric vehicles sector is encouraging and the improving supply dynamics of the EV market are likely to drive innovation and growth in the sector.
‘2018 was a very positive year for the used car market and we expect it to remain strong in 2019 continuing to provide franchised retailers with a key opportunity to boost profitability.
‘We look forward to seeing what 2019 has in store as the effects of WLTP ease, stock supply improves, and the political environment becomes more stable.’
Ian Gilmartin, head of retail and wholesale at Barclays Corporate Banking, said: ‘A multitude of factors contributed to the disappointing year, with general economic weakness and Brexit uncertainty putting the brakes on big ticket purchases for many consumers. This was compounded by more specific concerns, most notably the continuing confusion around the future of diesel models and other regulatory developments that affected production, pricing and availability of suitable stock.
‘It’s not time to panic and worth remembering that in absolute terms sales are still way ahead of the nadir we hit at the start of the decade. Manufacturers and retailers are making positive steps to try to innovate and adapt to the changing landscape, in particular through the development of new alternatively fuelled models. But they can’t do it all on their own – they need support from the government to encourage more new vehicle purchases and allow the industry to thrive this year.’
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