UK new car registrations plunge in January

Britain's new car market declined 7.3% in January, according to figures published by the Society of Motor Manufacturers and Traders on Wednesday.

The SMMT revealed that just 149,279 vehicles left showrooms in January, as continued confusion surrounding diesel and clean air zones and ongoing weak consumer and business confidence continued to affect demand.

Continued low consumer demand was seen as a key driver behind the decline, with registrations by private buyers down 13.9%, while fleet registrations fell by 2.2% month-on-month.

Registrations of new diesel cars fell for a 34th consecutive month - down 36% to their lowest rate since 2000, while petrol demand declined 9.5%.

On the other hand, alternatively fuelled cars continued to grow in popularity, with hybrid electric cars increasing by 20.6% and plug-in hybrid electric vehicle demand more than doubling. Battery electric vehicle registrations also surged - up 203.9% to 4,054 units.

The figures come after the government announced its ambition to end the sale of all vehicles with an internal combustion engine by 2035 on Tuesday.

SMMT chief executive Mike Hawes said: "The new car market is a key driver of the UK's overall economy, so another month of decline is unsettling.

"Consumer confidence is not returning to the market and will not be helped by government's decision to add further confusion and instability by moving the goalposts on the end of sale of internal combustion engine cars."

Pantheon Macroeconomics' Samuel Tombs noted that while the figures were "much worse" than the average monthly decline in 2019, a recovery "should emerge soon".

However, Tombs said the boost to car sales from the post-election recovery in sentiment likely wouldn't emerge until the second quarter, at the earliest.

"That said, any recovery in demand likely will be constrained by a declining flow of people rolling off PCP finance deals, which typically last three years; registrations were 10% lower in 2017 than in 2016," he added.

"This, plus the weak start to the year, suggests that car registrations merely will match 2019’s average level this year."