New car market falls more than 9% as buyers’ confidence declines

The UK new car market plunged more than 9% in September as consumer and business confidence fell away.

The fall, the first time the important September market has fallen in six years, saw new registrations decline by 9.3% to 426,170 units.
Diesel sales fell by more than a fifth (21.7%) amidst concerns over tough new emissions regulations.

In contrast, demand for alternatively fuelled vehicles rose 41%.

The Society of Motor Manufacturers and Traders (SMMT) has cited economic and political uncertainty, and confusion over air quality plans for the fall in consumer confidence.

Nevertheless, sales fell across all sectors, with demand from business, fleet and private buyers down -5.2%, -10.1% and -8.8% respectively.

Most manufacturers felt the pain.

Jaguar declined 8.7% year-on-year although it was by no means the worst affected. Strong sales throughout the year mean the manufacturer is still up 10% for the nine months to the end of September.

Stable mate Land Rover fared better showing a small decline of 0.85% and it is more than 5% up for the year to date.

BMW fell away 3.5%, with Audi at 4.8% and Mercedes Benz down 1.7%.

In the volume market, Ford struggled, dropping almost 20% year-on-year but retaining its leading market share – although this dipped below 10% to 9.3%.

However, Vauxhall continued its free-fall, dropping more than 25% year-on-year as buyers continued to shun the brand ahead of its sale to Peugeot.

One shining star was Aston Martin. The luxury sports car manufacturer saw a 10.8% increase in sales year-on-year and for the nine months to the end of September it is up more than 87%.

The SMMT said confusion surrounding air quality plans had inevitably led to a drop in consumer and business demand for diesel vehicles. It said this should be of concern as it was undermining the roll out of the latest low emissions models and thwarting the ambitions of both industry and government to meet challenging CO2 targets.

It said if new diesel registrations continued on this negative trend, UK average new car CO2 levels could actually rise this year, the first time such an increase would have occurred since average CO2 emissions were recorded.

So far this year 485,067 diesel vehicles have been produced in the UK, and the trade body said maintaining strong demand for the latest new diesel vehicles was essential for the health of the UK automotive sector, which employs over 814,000 people – a significant number of which work in the West Midlands.

Mike Hawes, SMMT chief executive, said: “September is always a barometer of the health of the UK new car market so this decline will cause considerable concern.

“Business and political uncertainty is reducing buyer confidence, with consumers and businesses more likely to delay big ticket purchases. The confusion surrounding air quality plans has not helped, but consumers should be reassured that all the new diesel and petrol models on the market will not face any bans or additional charges.”

He added that manufacturers’ scrappage schemes were proving popular and were to be encouraged, given fleet renewal was the best way to address environmental issues in towns and cities.

Commenting, Professor Christian Stadler, of Warwick Business School, said: “Brexit has caused the slump in car sales in the UK. The drop over the last six months has been interpreted as a reaction to the uncertainty about diesel cars after the Volkswagen scandal, but the data does not support this.

“Sales of diesel cars are further down than other cars, but that does not explain the overall drop in car sales, especially as the scrappage scheme for diesels used by some manufacturers should have helped sales.

“Plus, most importantly, when you compare the UK with data in other Western European countries their car sales have increased and considerably so. The only difference in the UK is Brexit and the uncertainty that it is causing, which is also affecting the economy as that is not looking so good compared to those Western European countries.

“Consumers do not know where Brexit is going to go and buying a car is a big investment, so they are putting it off to a later date.”

Also, he said Brexit would raise costs for manufacturers as they dealt with the uncertainty plus the interlinkage between manufacturers and suppliers across Europe, making cars more expensive in the UK because of the fall in sterling.

“This also means there are not so many cheap finance deals around, with zero finance deals very hard to find,” he added.