UK new car registrations dropped 2.4% in 2019 to 2.3m units, marking a third consecutive year of decline, according to the latest figures from the Society for Motor Manufacturers and Traders (SMMT).
The trade body cited a number of factors that impacted the number of sales, including weak business and consumer confidence, general political and economic instability and confusion over clean air zones.
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A decline in private demand drove the decline, with consumer registrations down 3.2%. The small volume business market also saw a decline, dropping 34.4%. Fleet registrations, however, remained stable across the year, up 0.8%.
Demand for petrol cars was up 2.2% in 2019; however, it was not enough to offset the significant 21.8% decline in diesel registrations. December marked the 33rd month of diesel decline, as continued anti-diesel rhetoric and confusion over clean air zones hit demand. This has resulted in drivers keeping their older, more polluting vehicles on the road for longer, holding back progress towards environmental goals.
Bucking the overall trend, combined alternatively fuelled vehicle (AFV) registrations surged in 2019 to take a record 7.4% market share. Hybrid electric vehicles (HEVs) continued to dominate this sector, with registrations increasing 17.1% to 97,850 units. Battery electric vehicle (BEV) registrations experienced the biggest percentage growth, rising 144.0% to 37,850 units and overtaking plug-in hybrids for the first time.
The SMMT notes that while the increase in BEV demand is welcome, the 1.6% market share is way off the 50-70% market share the government envisages in the next 10 years.
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By GlobalDataDecember ended a turbulent year on a positive, however, with the market up 3.4%. Fuel type demand mirrored that seen throughout the year, with diesel declining 19% and petrol rising 2.6%. BEVs saw another huge increase in the last month of the year, up 220.7%, while PHEV registrations grew for only the fourth month this year, up 21.8%.
Mike Hawes, SMMT chief executive, said: ““A third year of decline for the UK new car market is a significant concern for industry and the wider economy. Political and economic uncertainty, and confusing messages on clean air zones have taken their toll on buyer confidence, with demand for new cars at a six-year low.
“A stalling market will hinder industry’s ability to meet stringent new CO2 targets and, importantly, undermine wider environmental goals. We urgently need more supportive policies: investment in infrastructure; broader measures to encourage uptake of the latest, low and zero emission cars; and long term purchase incentives to put the UK at the forefront of this technological shift. Industry is playing its part with a raft of exciting new models in 2020 and compelling offers but consumers will only respond if economic confidence is strong and the technology affordable.”
Market Reaction
Sue Robinson, director of the National Franchised Dealers Association (NFDA), said: “It is encouraging to see that plug-in hybrids and electric cars saw consistent growth throughout the year. We expect the electric vehicle market to experience a significant increase in 2020 as new models become available and supply constraints ease.
“In 2019, the decline in new car registrations was partially offset by a strong used car market which provided profit opportunities for retailers who, in turn, offered excellent deals to their customers. NFDA hopes that a more stable political environment will support the automotive retail sector and restore consumer confidence in 2020.”
James Fairclough, chief executive of AA Cars, said: “December’s fall in sales figures reflects the challenging environment that faced the industry in 2019, but there are reasons for optimism for the year ahead. As with most of 2019, political and Brexit uncertainty hovered over much of December, but last month’s election will hopefully spark a much-needed resurgence in sales this year.
“Dealers will want to gain some momentum quickly in the first quarter, and any deals and special offers they can provide will go a long way to attracting motorists back to the forecourts.
“Looking ahead, hopefully 2020 will see the continued growth of electric and hybrid vehicles. Their sustained growth provided a positive thread throughout 2019, with drivers showing great enthusiasm for environmentally-friendly cars.”
Seán Kemple, Director of Sales at Close Brothers Motor Finance, commented: “There’s no denying that the motor industry has suffered in the last year, but there’s hope for 2020. The drop of 2.4% in year to date sales compared to 2018 reflects the strain of Brexit uncertainty on consumer confidence, and the impact of mixed messages around fuel type.
“2020 holds the key to a new era of car buying. Electric is set to spark, and we can expect to see legislative changes that make alternative fuelled vehicles (AFVs) more attractive to potential buyers. Tax benefits of having an AFV are expanding, and fresh investment pledges to develop charging-point networks will boost demand.”
Alex Buttle, director of Motorway.co.uk, added: “Manufacturers will be pinning their hopes on EV sales exploding in 2020, but we need to be mindful that fully-electric car registrations still account for less than 2% of all registrations. And if diesel sales continue on their relentless downward path, it’s hard to see a full reversal of fortunes, at least in the first quarter of this year.
“On a more positive note, the December General Election did at least provide the decisive outcome the industry was hoping for. There’s still a huge dark cloud hanging over us with no EU trade deal on the table, but if consumers needed certainty to start buying again, they received it in the form of a majority Conservative government.”
