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Fleet registrations fall faster than overall new car market

Date: 05 November 2018   |   Author: Sean Keywood

The UK's new car market declined during October, with a greater fall in registrations among fleets than private buyers.

Figures released by the Society of Motor Manufacturers and Traders (SMMT) show an overall market decline of 2.9%, including a fleet sector decline of 5.2%, compared with a 1.0% decline in private registrations.

Business sales, which the SMMT classes as those made to firms with fewer than 25 vehicles, were up by 10.0%, although these represent a small fraction of the overall market.

Diesel car registrations continue to plummet, down 21.3%, while petrol registrations rose by 7.1%, and alternatively fuelled car registrations rose by 30.7%.

The latter figure included an 86.9% rise in pure electric cars, a 31.0% growth for hybrids and a 19.1% rise for plug-in hybrids, although the SMMT says the announcement of cuts to the government Plug-In Car Grant may have driven sales.

For the year to date, the overall new car market is down by 7.2%, with fleet registrations down by 7.8%.

SMMT chief executive Mike Hawes said: "VED upheaval, regulatory changes and confusion over diesel have all made their mark on the market this year, so it's good to see plug-in registrations buck the trend.

"Demand is still far from the levels needed to offset losses elsewhere, however, and is making the government's decision to remove purchase incentives even more baffling."

Hawes said that the government's ambitions to increase sales of alternatively fuelled vehicles required "world-class incentives".

He continued: "Even before the cuts to the grant, those ambitions were challenging. We need policies that encourage rather than confuse.

"The government's forthcoming review of WLTP's impact on taxation must ensure that buyers of the latest, cleanest cars are not unfairly penalised, else we will see older, more polluting cars remain on the road for longer."

Commenting on the market figures, Lex Autolease head of consultancy Ashley Barnett said: "October's decline is not unexpected. As it stands, company car drivers who renew now are doing so without knowing the tax consequence beyond 2021. 

"It is positive that more clarity will come in the spring, but the uncertainty in the interim will make it difficult for drivers and fleet decision-makers to commit to fleet replacements."

Barnett said Lex recommends that fleet operators consider extending existing agreements until the outcome of the WLTP consultation is known, or elect for an interim three-year replacement cycle.

He added: "Alternatively, employees may decide that company cars are unattractive in light of this tax uncertainty, the unintended consequence being that many may be pushed towards a less-regulated grey fleet environment. 

"In this scenario, higher emissions and safety issues create new challenges, and progress against the government's Road to Zero strategy is slowed."