UK new car sales continue downward spiral in January
The new car market declined 6.3% across the UK in January, with just 163,615 cars rolling out of showrooms in the first month of the year.
This was the 10th successive drop in UK new car sales but was less than the double-digit drops seen through the fourth quarter of 2017.
Car demand fell across the board, the Society of Motor Manufacturers and Traders reported on Monday, with registrations by private individuals, businesses and fleet buyers dropping 9.5%, 29.7% and 1.8% respectively, with dual purpose cars such as SUVs being the only segment to see growth – up 6.6% to account for 20.2% of all new car registrations.
Elsewhere, registrations of petrol and alternatively fuelled vehicles, rising 8.5% and 23.9% respectively, but growth failed to offset the significant decline in demand for new diesel cars, down 25.6% as confusion over government policy continued to cause buyers to hesitate.
The fall in private new car sales in January after drops of 15.9% in December and 5.1% in November indicate that squeezed, uncertain consumers are reluctant to make major purchases, said Howard Archer, chief economic advisor of the EY Item Club.
“It is notable that private sales saw a deeper drop than the overall decline in car sales in 2017, with a fall of 6.8%. Consequently, the share of private sales of total new car sales fell to 44.2% in 2017 from 44.8% in 2016. This is consistent with the overall softness in consumer spending over the year. Consumer spending likely grew at the slowest rate since 2011 in 2017.”
Alex Buttle, director of Motorway.co.uk, said, "After a tough 12 months, the UK car industry needed a strong start to the New Year. Sadly, on the surface, January figures make grim reading, with new car registrations falling for the ninth consecutive month."
"The problem for the industry is that diesel sales are dragging down the rest of the market, which is showing signs of resilience. Take diesel out of the equation and the picture doesn't look anywhere near as bleak. Petrol and AFVs sales are actually up, as they were in December," Buttle added.
The SMMT stressed the importance of the UK car industry to the nation's economy, noting that it directly supported around 3,350 jobs and, combined with the UK's petrol engine output, delivered some £8.5bn to the economy.
Mike Hawes, SMMT chief executive, said, "The ongoing and substantial decline in new diesel car registrations is concerning, particularly since the evidence indicates consumers and businesses are not switching into alternative technologies, but keeping their older cars running."
"Given fleet renewal is the fastest way to improve air quality and reduce CO2, we need government policy to encourage take-up of the latest advanced low emission diesels as, for many drivers, they remain the right choice economically and environmentally," he added.