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 registrations down 1.3% year-on-year.
Speaking to Motor Finance, Philip Nothard, customer insight and strategy director for Cox Automotive UK said: “The new car market has faced a number of challenges. If you look at 2018 WLTP, 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 effects production, import, export in the new car marketplace so it’s like double layer headwind,” he said.
Nothard said a lot of the industry then moved to used cars as an “alternative revenue stream.”
“Any really large new vehicle dealer group who were with a manufacturer that was struggling with supply and some of the problems they had then switched boats into used cars,” he added.
Figures released from the SMMT today showed new car registrations declined by 1.3% in November.
Registrations of diesel cars fell for the 32nd month, down 27.2% but petrol grew by 2.0%.
However battery electric vehicles grew 228.8% with plug in hybrids and hybrids rising by 34.8% and 15% respectively.
“These are challenging times for the UK new car market, with another fall in November reflecting the current climate of uncertainty,” said Mike Hawes, chief executive of the SMMT. “It’s good news, however, to see registrations of electrified cars surging again, and 2020 will see manufacturers introduce plenty of new, exciting models to give buyers even more choice.
“Nevertheless, there is still a long way to go for these vehicles to become mainstream and, to grow uptake further, we need fiscal incentives, investment in charging infrastructure and a more confident consumer.”
Nothard said consumer appetite for second hand electric vehicles is growing.
“Whether it is increasing by desirability or by incentive is the question. Obviously with all of the ULEV zoning emissions going into city centers and tariff charges taking place, there is a forced market.”
“I think retailers are getting more knowledgeable and I think there is still some more knowledge that they require but they are increasing this. I think it’s still fairly low at the minute in terms of its market there is still a long way for it to go and you have to look at whether you are thinking about pure plug in electric vehicles or whether you are looking at hybrids and alternative fuels and that’s where there is a bit of a variance in the output of that,” he added.
Other than Brexit, one of the reasons Nothard believes used cars are the predominant focus for dealers is because of the corporate average fuel economy legislation (CAFÉ) coming into effect in January.
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 said: “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 because they want them to go into next year and put forward their higher polluted 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 because they want them to count next year not this year,” he concluded.