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Demand for new cars in the UK dropped by 8.5% in May, the latest figures from the Society of Manufacturers and Traders (SMMT) have revealed.
The fleet market once again proved to be the most resilient, however, with registrations falling by 5.3% to 103,657 units compared with May 2016.
Registrations of new cars to private buyers collapsed during the month, declining by 14.0% to 76,554 vehicles, while the niche business market grew by 20.1% to 6,054 units.
This is the second consecutive month of poor performance for the new car market following a 19.8% decline in April after adoption of the new, harsher Vehicle Excise Duty rates.
Year-on-year registrations are down by 0.6% compared with the first five months of 2016. However, the business and fleet sectors have driven much of the demand, up 5.3% and 2.4% respectively, offsetting a decline of 4.2% from private buyers.
Recent negative publicity surrounding the use of diesel vehicles appears to have impacted demand, which was down 20.0% to 81,489 units. Registrations of petrol-powered cars remained broadly similar to May 2016 - up by 0.4% - while appetite for alternatively-powered vehicles grew considerably. Compared with last May, registrations grew by 46.7% to command a 4.4% market share - a new record.
The Ford Fiesta once again topped the registrations charts with 7,617 units last month, with the supermini almost 20,000 units ahead of its nearest competitor - the Ford Focus - in the year-to-date registrations chart.
"We expected demand in the new car market to remain negative in May due to the pull-forward to March - which was an all-time record month - resulting from VED reform," said Mike Hawes, SMMT chief executive.
"Added to this, the general election was always likely to give many pause for thought and affect purchasing patterns in the short term. Although demand has fallen, it's important to remember that the market remains at a very high level and, with a raft of new models packed with the latest low emission and connected technology coming to market this summer, we expect the market to remain strong over the year."
Chris Bosworth, director of strategy at Close Brothers Motor Finance, said:"The new car market is experiencing a turbulent time. The unsettled political landscape and rising inflation has impacted consumer spending, and the recent new vehicle tax rate is certainly impacting new car growth. Following the General Election, and as we enter the Brexit discussions, it's likely we'll see this pattern continue."
John Leech, head of automotive at KPMG UK, said: "The sharp fall in new car sales in May indicates that the peak in the UK new car market was in the first quarter of 2017. We should now expect to see a steady cooling of sales over the rest of the year and in 2018. UK consumer confidence for major purchases has been declining throughout 2017 and the adverse changes to Vehicle Excise Duty applied in April 2017 are expected to dampen demand throughout the second quarter of 2017."
Shaun Armstrong, managing director of Creditplus.co.uk, said: "The impact of the General Election on new car registrations isn't the headline here, it's the decimation of diesel. May figures could well mark the beginning of the end for diesel vehicles, with new registrations down 20,000 last month. Buyers are ditching diesels in their droves and it's hard to see how diesel can recover from what feels like a mortal blow. There is so much negative press around diesel at the moment - with proposals to introduce a toxin tax and the Government planning to launch a car scrappage scheme - it's difficult to see anyone choosing diesel over petrol and AFVs right now."
"Diesel still accounts for a large share of the market, with more than half a million new diesel cars registered since the start of the year. These changing trends suggest that consumers are now thinking more carefully about buying the fuel that's most appropriate for their needs," said Simon Benson, director of motoring services at AA Cars.
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