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New car sales on the slide

Date: 18 January 2018   |   Author: Sean Keywood

After years of booming sales, growth in the UK car market finally came to an end in 2017, with registrations dropping for the first time since 2011.

Figures released by the Society of Motor Manufacturers and Traders (SMMT) show a 5.7% fall on the previous year, to 2.54 million.

This was led by a dramatic drop in diesel registrations, which fell by 17.1% to 1.06 million, compared with petrol, which rose 2.7% to 1.35 million, and alternatively fuelled vehicles, including electric, which although rocketing by 34.8% still accounted for only 119,821 registrations.

With no sign that negative headlines and Government policies around diesel will ease off any time soon, industry experts, while stressing that demand for new cars remains strong, have predicted a further decline in 2018, with the state of the wider economy also a factor.

The most recent SMMT data forecast, released in October 2017, predicted registrations falling to 2.42 million in 2018, and 2.39 million in 2019.

SMMT chief executive Mike Hawes said, "2017 has undoubtedly been a very volatile year and the lacklustre economic growth means that we expect a further weakening in the market for 2018.

"The decline in the new car market is concerning, but it's important to remember demand remains at historically high levels. 

"Falling business and consumer confidence is undoubtedly taking a toll, however, and confusing anti-diesel messages have caused many to hesitate before buying a new low- emission diesel car."

James Dower, senior editor of Black Book at cap hpi, was not surprised by the registration figures.

"The decline in new-car registrations in 2017 ended up within our expectations," he said. 

"Certain media reports may reflect that 2017 has been a problematic year for new car sales but, in reality, we are more than likely to have witnessed a market that is closer to true new car demand than seen in previous years. 

Dower says that looking into 2018, a further decline in new registrations is expected.

The area where the market looked relatively healthier in 2017 was in fleet sales - classed by the SMMT as sales to businesses with at least 25 vehicles.

These saw sales drop by just 4.5%, compared to 6.8% for private registrations.

Ashley Barnett, head of consultancy at Lex Autolease, said, "It's not surprising to see a continued fall in registrations, particularly in light of the publicity around emissions, introduction of Clean Air Zones and changes to government policy around the future taxation on company cars.

"Despite this, we experienced strong growth within the SME market last year.

"We expect to see a decline in overall registrations in 2018, as consumers look for clarity around future economic plans and environmental strategy."

Barnett went on to predict that a major area of growth in 2018 would be in sales of ultra-low emission vehicles. Hawes agreed with this forecast, but said that, without arresting the diesel decline, it would not be enough to meet environmental targets, with average CO2 emissions having risen in 2017, for the first time in 14 years.

"Diesel cars, due to their greater fuel efficiency, typically emit, on average, 20% less CO2 than the equivalent performance of a petrol-engined vehicle," Hawes said.

"New technologies, including the latest low-emission diesels, are vital if the country and the industry are to meet their climate change targets."

Hawes said that the Government must create policies and incentives to encourage all low-emission vehicles irrespective of fuel type, whether that meant battery vehicles, hybrids, plug-in hybrids, hydrogen, or petrol and diesel models.

He added, "Fleet renewal is the fastest way to lower our carbon emissions and improve air quality, and consumers should buy the right car for their driving needs."

When it came to individual model sales, the Ford Fiesta again ended the year as the UK's bestselling car, with 94,533 sold in 2017.

The Volkswagen Golf came second, with 74,605 registrations, ahead of the Ford Focus, with 69,903, the Nissan Qashqai, with 64,216, and the Vauxhall Corsa, with 52,772.