The UK new car market declined 2.5% in the first three quarters of 2019, as uncertainty surrounding Brexit has stifled consumer confidence.
This is according to the latest figures from the Society for Motor Manufacturers and Traders (SMMT), which found that September saw modest year-on-year growth following a substantial 20.5% decline in the same month in 2018. This was due to new emissions regulations and lack of testing capacity across Europe affecting supply.
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The growth, representing some 4,421 units, was not enough to recover losses of over 87,000 in last year’s plate-change month. However, the newest figures leave the year-to-date market trailing some 49,000 units behind this time in 2018. It is also in stark contrast to other major European markets, which this September rallied in double digits.
While the same regulatory upheaval has been experienced across the EU, in the UK the market is being subdued by the added pressure of political and economic uncertainty, with weak confidence stopping consumers from committing to big ticket purchases, the SMMT said.
Volumes were driven by the fleet sector, which grew 8.6% in September. Meanwhile, private demand remained stable, up 0.1%, while business registrations declined -44.8%. Diesel registrations fell 20.3%, as petrols experienced a moderate increase of 4.5%.
There was good news for battery electric cars (BEVs), which saw the biggest percentage growth of all fuel types, up 236.4% (5,414 units) as new models boosted registrations. Plug-in hybrids (PHEVs) also saw growth for the first time in six months – albeit on the back of a 22.3% decline in the same month last year. Year-to-date PHEV registrations are now 5.2% below the same period two years ago. By comparison, popular hybrid electric and battery electric cars are up 32.4% and 125.1% on the same period.
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By GlobalData“September’s modest growth belies the ongoing downward trend we’ve seen over the past 30 months,” said Mike Hawes, chief executive of the SMMT. “We expected to see a more significant increase in September, similar to those seen in France, Germany, Italy and Spain, given the negative effect WLTP had on all European markets last year. Instead, consumer confidence is being undermined by political and economic uncertainty.
“We need to restore stability to the market which means avoiding a ‘no deal’ Brexit and, moreover, agreeing a future relationship with the EU that avoids tariffs and barriers that could increase prices and reduce buyer choice.”
Industry reaction
Michael Woodward, UK automotive lead at Deloitte, said: “The introduction of new 69 plates was always likely to drive sales but, when compared to a low volume month last year, this nominal growth could be a disappointment to the industry.
“Once again, we have seen the EV market perform tremendously. We are seeing exponential growth in the sector suggesting that the tipping point that we have been predicting is within reach.”
Seán Kemple, director of sales at Close Brothers Motor Finance, comments: “As demand for electric vehicles rises, we’re starting to see new models being launched into the market with increased range and the same sort of price parity of their fossil fuel equivalents. This, along with the announcement of the zero per cent tax on pure electric vehicles for company car drivers from April 2020, is having a big impact on the sector.”
Sue Robinson, director of the National Franchised Dealers Association (NFDA), said: “There continues to be strong consumer interest in used cars. While new car supply constraints ease, many motorists are choosing to opt for second-hand vehicles.
“It is vital that the Government provides clarity to businesses and consumers as soon as possible so as not to undermine the stability of the automotive sector, one of the key contributors to the UK economy.”
James Fairclough, chief executive of AA Cars, said: “This pick-up in registrations will put a spring in the motor industry’s step. After a testing five consecutive months of falling sales, the turnaround – modest as it is – has provided a welcome respite.
“In addition to the new plates, September’s growth suggests that consumers are taking advantage of the compelling finance deals currently on offer, while keeping a close eye on developments in the market – particularly when it comes to green cars.”
