New car sales continue to drop, as diesel buyers fall by a quarter


New car registrations continued to decline in February – with diesel buyers down by nearly a quarter, industry figures show.

The traditionally quiet month for car sales, due to the March numberplate change, was even slower than usual, with drivers apparently not buying into industry rhetoric about the latest diesel models being ‘the cleanest in history’.

New car registrations dipped 2.8 per cent in February compared to the same month last year, with both private buyers and fleet operators again reducing their purchases, figures by the Society of Motor Manufacturers and Traders show.

In decline: A rise in sales of petrol and green cars has failed to offset a slump in diesel sales

In decline: A rise in sales of petrol and green cars has failed to offset a slump in diesel sales

In decline: A rise in sales of petrol and green cars has failed to offset a slump in diesel sales

That means just 80,805 new cars were registered last month, marking the 11th consecutive year-on-year fall, albeit a smaller drop than January’s 6.3 per cent decline. 

Some 258,000 new cars have been registered so far this year, a decrease of 5.1 per cent on the same period in 2017.

While sales of petrol and alternative fuel vehicles – including hybrid, plug-in-hybrid and battery electric cars – were up 14.4 per cent and 7.2 respectively, they failed to offset a decline in diesel registrations, which fell by 23.5 per cent. 

The rising share of petrol car sales led to the first increase in new car CO2 exhaust emissions on record last year, leading to concerns that the diesel backlash will harm the environment. 

Drivers have been shunning diesel cars on the back of government surcharges – such as the VED car tax rise from April – and the threat of low emissions zones across the country.

Diesel cars held a market share of just 35 per cent last month, compared with 44.5 per cent in February 2017.

It comes as the Chancellor announced at last year’s Autumn Statement that anyone who buys a diesel car from April 2018 that doesn’t meet a new emissions standard will have to pay tax on it one band higher than before for the first year, in some cases resulting in a £500 increase.

Commenting on today’s figures, SMMT chief executive Mike Hawes said: ‘Although the new car market has dipped, it remains at a good level despite the drop in demand for diesel. 

‘Consumers should be reassured, however, that the latest cars are the cleanest in history and can help address air quality issues, which is why they are exempt from any restrictions.

‘Looking ahead to the crucial number plate change month of March, we expect a further softening, given March 2017 was a record as registrations were pulled forward to avoid VED changes.’

 In decline: February marked the 11th consecutive month of falls in sales of new cars

 In decline: February marked the 11th consecutive month of falls in sales of new cars

 In decline: February marked the 11th consecutive month of falls in sales of new cars

Sales of cars to privates fell 2 per cent last month, suggesting that squeezed, uncertain consumers are still reluctant to make major purchases.

Howard Archer, chief economic advisor to the EY ITEM Club, said the fall in private sales was ‘consistent with the overall softness in consumer spending over the year’.

He added: ‘The car sector may take limited consolation from the fact that the February/January declines were less than the double-digit year-on-year drops seen over the previous three months […]. 

‘It is also possible that sales in January and February suffered modestly as a consequence of some car sales being brought forward into the first quarter of 2017 by consumers and businesses looking to beat the changes to vehicle excise duty (VED).

‘However, the fact that February marked an 11th successive decline of falling car sales, points to a sustained loss of momentum in the sector.’

The Ford Fiesta continues to be the best-selling new model in the UK

The Ford Fiesta continues to be the best-selling new model in the UK

The Ford Fiesta continues to be the best-selling new model in the UK

Alex Buttle, director of car buying comparison website Motorway.co.uk, noted how sales of green cars, despite rising, are doing so at half the rate of petrol cars.  

‘While hybrid and electric sales were up 7.2 per cent in February, petrol sales were up 14.4 per cent. That should set alarm bells ringing in government but the bells are worryingly silent.

‘Car owners are confused about what they should be doing and what their purchasing choices are across petrol, Euro 6 diesels and AFVs.

‘If the Government were more insistent about the need to switch, and started offering subsidies for AFV car purchases, then I’m sure we would see more car owners switching.

‘But there’s a lot of silence out there at the moment and very little action, so consumers don’t see any reason to buy AFVs and are sticking to what they know with petrol cars.’ 

Justin Benson, head of automotive at KPMG in the UK, added: ‘Diesel should still be a relevant choice for consumers, as the latest technology does help address air quality issues. 

‘Whilst sales for petrol and alternatively fuelled vehicles are increasing, they are not filling the gap. 

‘Consumer confidence is low and the evidence suggests people are keeping their cars for longer before making a buying decision. 

‘Whether or not this is due to Brexit is hard to say, but the automotive industry needs certainty in order to maximise new car sales growth.’ 

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