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Fleets boost new car market amid continued diesel gloom

Date: 21 August 2018   |   Author: Sean Keywood

New car registrations increased slightly during July, but heavy falls in diesel sales show no signs of abating. Sean Keywood reports.

The UK new car market has rebounded slightly, largely thanks to fleets, but a large fall in demand for diesel remains - and is forecast to continue.

Figures released by the Society of Motor Manufacturers and Traders (SMMT) show that, in July, new car registrations rose by 1.2% year-on-year to 163,898. The improvement was mainly driven by an increase in the number of fleet registrations - to organisations with 25 or more vehicles - which were up by 2.6%.

Sales to fleets with fewer than 25 vehicles - a very small part of the market - were down by 10.2%, while private sales were up by 0.1%.

However, despite the marginal improvement overall, the picture was still grim for diesel-powered cars, for which registrations were down by 24.4%. There have been sustained heavy falls for cars powered by the fuel and, according to the SMMT's recently updated sales forecast, the diesel decline will continue.

The forecast predicts diesel cars will form a 32.3% share of total registrations in 2018 - down from 47.7% in 2016 and 41.9% in 2017.

Diesel car sales are predicted to fall yet further in 2019, when they are forecast to form 30.5% of registrations.

Beneficiaries of the diesel decline in July were petrol car sales, which were up by 20.1%, and alternatively fuelled vehicles (AFVs), including hybrids and plug-ins, which were up by 21% to a new record high market share, though this was still only 6.5% of registrations.

For 2018 to date, the overall market remains down by 5.5%, following turbulent sales earlier in the year.

The SMMT is forecasting a minor rally before the end of the year to leave the overall 2018 figure down 4.1%, before a further 1.9% decline in 2019.

Reacting to the July figures, SMMT chief executive Mike Hawes said, "The feel-good factor from a sun and sport-packed July, combined with some fantastic deals on a raft of exciting new models, clearly helped keep showrooms relatively busy last month. 

"It's great to see AFVs benefitting from this growth, and government's acknowledgement of the vital role new-tech diesel will play in its Road to Zero strategy should help even more motorists benefit from the latest, safest and low-emission technology over the coming months."

Lex Autolease head of consultancy Ashley Barnett said more clarity was needed from the government to give buyers confidence.

"It's positive to see a slight uplift in new car registrations, but more clarity is needed to maintain this momentum," he said. 

"Drivers are still reluctant to make significant purchase decisions while there is uncertainty in the marketplace, specifically around the future tax treatment of company cars.

"Businesses and consumers need to be able to make confident, informed choices, particularly if we are to meet the targets set out in the government's recent Road to Zero strategy."

Barnett said more also needed to be done to boost the sales of AFVs.

"In order for 50% of new car sales to be ultra-low emission by 2030, we will need to see an additional 100,000 new AFV registrations each year between now and then," he said.

"We expect registrations of new AFVs to keep gathering pace in the coming months and are supporting customers with the switch to electric vehicles if suitable, but more needs to be done to increase their appeal and ease of use for drivers."

The Ford Fiesta remained the UK's bestselling car in July, with 6,222 registrations, ahead of the Volkswagen Golf with 5,582 and the Volkswagen Polo with 3,847.