New car market declines for third month in a row
The UK new car market declined for the third successive month in June as forecasts of a cooling off period following sustained growth were borne out.
According to figures released by the Society of Motor Manufacturers and Traders, there were 243,454 new cars – a fall of almost 5% on the same month last year.
Manufacturers such as Jaguar and Land Rover remain in positive territory as buyers were lured by their new models but for some, the month was dreadful.
Vauxhall saw its sales decimated, with a fall of 18% year-on-year as consumers shunned dealers over concerns about the future of the business following GM’s decision to sell both it and sister brand Opel.
Looking for the positives, the SMMT said the fall (4.8%) in new registrations was at a slower pace than in the previous two months as demand stabilised following a record first quarter and the subsequent market turbulence caused by the recent changes to Vehicle Excise Duty, concerns over Brexit and the uncertainty posed by the General Election.
The market is now said to be more in line with 2017 forecasts.
Demand in the month was down across private, fleet and business registrations, recording falls of -7.8%, -2.4% and -8.3% respectively. Meanwhile, the alternative fuelled vehicles (AFV) sector enjoyed notable growth, with demand rising 29.0% to 10,721 units to maintain a record 4.4% market share for a second month. Petrol registrations rose by 2.5% but the popularity of diesel engines continues to wane as sales fell 14.7%.
Compact cars, typically powered by smaller petrol engines, proved most popular for all buyers, with superminis and small family cars accounting for almost 60% of the market. Small family cars and SUVs were the only two segments to register growth in June, up 6% and 11.3% respectively.
The SMMT said the overall first half performance remained strong, falling slightly by 1.3% to 1,401,811 units and putting the market on track to meet 2017 forecasts.
Fleet and business buyers drove demand across the first six months with registrations up 1.5% and 2.7% respectively, in contrast to a 4.8% drop in private purchases, although almost 650,000 consumers have chosen to buy a new car this year.
Mike Hawes, SMMT chief executive, said: “As forecast, demand for new cars has started to cool following five consecutive years of solid growth but the numbers are still strong and the first half of the year is the second biggest on record.
“Provided consumer and business confidence holds, we expect demand to remain at a similarly high level over the coming months. It’s encouraging to see alternatively fuelled vehicles experiencing rapid growth but adoption is still at a relatively low level and more long term incentives are required if this new generation of vehicles is to be a more common sight on British roads.”
Commenting, John Leech, head of automotive at KPMG UK, said the latest figures were reflective of a cooling off in the market.
“The drop in sales signals the softening in consumer confidence that has been seen more widely in the economy this year, and is in part a reflection of a decline in household income and recent political uncertainty,” he said.
“Looking to Europe, the major markets of Germany, France and Italy are performing strongly and this, coupled with sterling’s weakness, is causing vehicle manufacturers to reduce UK incentives and volume expectations. Diesel sales fell sharply again, by almost 15%, as consumers continue to react to the negative headlines around air quality, despite no planned regulatory action against Euro 6 diesels.
“Consumer thirst for PCP deals, however, has not yet been impacted by the recent negative press, but as these headwinds continue to impact the UK market we forecast a 5% decline in the new car market during the second half of 2017.”
