UK new car market drops for the first time in six years to 2.54 million

Time 8:42 am, January 5, 2018

NEW car registrations tumbled by 5.6 per cent in 2017 – the first time the UK automotive industry has seen annual registrations fall in six years. 

The Society of Motor Manufacturers and Traders revealed this morning that the number of cars registered reached only 2,540,617 last year.

Figures were even worse than expected when the SMMT announced it had revised its estimates for the next three years. Predictions then were that the 2017 new car market would reach 2.565m, down only 4.7 per cent.

Over the past nine months car sales have been down and December was no different. The month was down 13.9 per cent to around 152,473 cars, making the last quarter of the year down by 12.4 per cent.

SMMT chief executive Mike Hawes commented: ‘It’s important to put this into context – this is about the sixth biggest year ever and third best in the last decade, coming off a record 2015 and 2016, so the market is still a record high. The decline is definitely cause for concern, though.’

Diesel took the biggest hit of the year, with demand down by 17 per cent. Although alternatively fuelled vehicles (AFVs) were up by 37 per cent, their market share remains low at 4.7 per cent (3.3 per cent in 2016).

Among the 119,821 AFVs registered, around 71,000 were hybrids, 33,000 plug-in hybrids and 13,500 full electric.

Managing director of Black Horse Richard Jones said: ‘New car sales reached record levels in the early part of 2017 so it’s not a surprise that we saw these cool down as the year went on. This was down to a range of factors including consumer confidence, rising car prices and uncertainty over fuel choice leading to a fall in diesel sales.

‘I believe we’ll see new car sales continue to decline in the first quarter of 2018 given that this period in 2017 was so strong. This should help dampen fears of oversupply having a negative impact on used car prices and is positive in the long term by ensuring the new car market is operating from a sustainable position. I would also expect the used car market to continue to perform well.

‘With uncertainties facing the UK economy it’s hard to make a confident forecast for 2018 as a whole. I believe a big test for the industry will come after quarter one when we will see how the underlying UK economy and consumer confidence is influencing car demand.’

Nathan Coe, chief operating officer at Auto Trader commented: ‘Tough conditions have been made all the more challenging by the negative tone of the fuel debate, as well as the lack of a clear Government strategy to encourage motorists to exchange older diesel cars to the latest diesel technology or alternatively fuelled vehicles. It’s clear that the Government’s demonisation of diesel has adversely impacted the new car market as the decline in registrations shows; it’s also evident on Auto Trader as we have seen a 27 per cent decline this year for consumers searching for diesel cars. In contrast we’ve seen an 84 per cent increase in searches for electric vehicles.

‘The conversation needs to change so that consumers feel encouraged to change their cars to try a newer diesel, electric or hybrid fuel type. Unfortunately, without the much needed clarity from the Government and a concerted effort from the whole industry to embrace the huge opportunity that electric vehicles present, the new car market will continue to face unnecessary challenges in 2018.’

Director of the National Franchised Dealers Association Sue Robinson added: ‘Despite recent confusion and speculation, with low interest rates and record employment levels franchised retailers remain optimistic. Although 2018 will bring challenges, there will also be many opportunities for our sector which is resilient and capable of adapting to changes.

‘The significant growth of the alternative fuel vehicles segment is particularly encouraging. However, as petrol and diesel still represent the vast majority of UK’s car parc, it is crucial that consumers and businesses continue to receive consistent support to ensure that this transition is as smooth as possible.

‘NFDA will continue to work with the Government and key partners to safeguard the interests of one of the major contributors to the UK economy, the automotive retailing industry.’

MORE: New car sales hit 2.69m record in 2016 – but it’s not going to continue

MORE: SMMT revises registration prediction for 2017 to only 2.6 million cars

MORE: Used car sales fall but market is holding steady, says SMMT

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Rebecca Chaplin's avatar

Rebecca has been a motoring and business journalist since 2014, previously writing and presenting for titles such as the Press Association, Auto Express and Car Buyer. She has worked in many roles for Car Dealer Magazine’s publisher Blackball Media including head of editorial.

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