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New car registrations experienced a fall in April following the adoption of the new Vehicle Excise Duty rates, the latest Society of Motor Manufacturers and Traders figures have revealed.
In total, 152,076 new cars found homes during the month, a 19.8% decline compared to April 2016.
Demand was down across all sectors, although the fleet sector experienced the lowest downturn - a 12.3% decline on the previous year's figures.
All fuel types also experienced a downward spiral, with alternatively fuelled vehicle registrations falling for the first time in 47 months, although it was a marginal decline at 1.3%.
Despite these drops in registrations, the overall new car market is still ahead in the first quarter of 2017 compared to the same period in 2016, with a record 972,092 cars registered during the first four months of the year - a 1.1% rise on 2016's figures.
The Ford Fiesta retained its crown as the most registered car of the month on 4,957 units, with the Nissan Qashqai on 4,430, and the Mercedes-Benz C Class rounded out the top three with 3,777 cars finding homes last month.
"With the rush to register new cars and avoid VED tax rises before the end of March, as well as fewer selling days due to the later Easter, April was always going to be much slower," said Mike Hawes, SMMT chief executive. "It's important to note that the market remains at record levels as customers still see many benefits in purchasing a new car. We therefore expect demand to stabilise over the year as the turbulence created by these tax changes decreases."
Chris Bosworth, director of strategy at Close Brothers Motor Finance, added: "We expect the turbulent political landscape, rising inflation and its impact on consumer spending will hinder new car growth in the months ahead. As such, we expect that consumers will flock to the one- to three-year 'nearly new stock' market, given the quality and value of cars available in this market."
Lauren Pamma, head of fleet consultancy at Lex Autolease, said: "A slight slowdown in fleet registrations in April was no surprise. However, it's encouraging that fleet and business registrations still account for more than half the total. Aside from the usual seasonal peak, the strong figures in March were partly due to businesses pulling forward vehicle procurement ahead of changes to Vehicle Excise Duty which came into force on 1 April."
"Intelligence from NFDA members suggests that footfall has remained stable, but there is an element of uncertainty, particularly due to the upcoming elections, which is encouraging customers to delay their purchases", said Sue Robinson, director of the National Franchised Dealers Association.
Ian Gilmartin, head of retail and wholesale at Barclays said: "A dip in new car registrations was anticipated by everyone in the industry following the duty changes introduced at the beginning of April. That said, a 20% fall is significant, and can't be entirely attributed to the increase in VED. Consumers may be beginning to tighten the purse strings on large purchases given ongoing uncertainty in the wider economy, so as has been predicted for some time we're probably now seeing some levelling off in demand."
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