Sales of new cars have pulled out of the slow lane as they grew for the second month in a row, new industry data shows.
Some 193,000 new cars were registered in May, an increase of 3.4 per cent compared with 186,000 during the same month last year, according to the latest monthly figures by the Society of Motor Manufacturers and Traders.
This is the second successive increase after 12 months of decline through to March, following a 10.4 per cent jump in April.
In demand: But much of May’s increase is due to poor numbers from April and May last year
However, as already noted with April’s numbers, much of the increase is due to poor numbers from April and May last year, when the implementation of new Vehicle Excise Duty tax rates caused a rush of new registrations in March.
In May 2017, new registrations fell by 8.5 per cent.
And despite the second successive rise in May, new car sales are still down 6.8 per cent over the year so far, with the SMMT blaming ‘economic and political uncertainty’ for an impact on demand.
Sales of diesel cars continued to be affected by pollution concerns and new regulations, falling by 23.6 per cent to 62,260, the 14th consecutive month of declines.
However, the drop in diesel sales was outweighed by higher demand for petrol cars, which rose 23.5 per cent and alternatively fuelled vehicles, which rose 36.1 per cent.
These ‘cleaner’ hybrid, plug-in hybrid and electric vehicles now have a market share of 5.8 per cent, compared to 4.4 per cent a year ago.
SMMT chief executive Mike Hawes said May’s figures were ‘encouraging’ and suggested that the market was now starting to rebalance.
‘To ensure long-term stability, we need to avoid any further disruption to the market, and this will require sustainable policies that give consumers and businesses the confidence to invest in the new cars that best suit their needs,’ he added.
‘Fleet renewal is the fastest way to improve air quality and reduce CO2, and this applies to hybrid and plug-in technologies as well as the latest low emission petrol and diesels which, for many drivers, remain the right choice economically and environmentally.’
May’s new registrations were 3.4 per cent higher than in May 2017
Howard Archer, chief economic advisor to the EY ITEM Club, was cautious about May’s rise in new registrations.
He said: ‘It should be kept in mind that May’s year-on-year gain benefited (as had April’s) from the fact that new car sales had fallen significantly in the corresponding months in 2017 following changes to vehicle excise duty (VED) at the start of April 2017.
‘Car sales had also been boosted in April by more selling days in April 2018 than in April 2017 due to the earlier Easter this year.’
He also added that car sales may also have benefited in both May and April from some purchases being delayed from March when the severe weather made life very difficult for UK consumers.
Alex Buttle, director of car buying comparison website Motorway.co.uk, said it was too early to be talking about a recovery.
But he added: ‘It’s not all doom and gloom though. Both petrol and AFV new registrations were up substantially last month and it’s dire diesel sales that continue to massively skew overall figures.
‘Take diesel out of the equation, and the picture doesn’t look quite so grim. But May is the eleventh consecutive month in which diesel sales have been down more than 20%.’
‘The car industry’s efforts to promote the benefits of Euro 6 diesel cars are clearly not resonating with consumers, and it’s difficult to see how confidence can be restored.’
Richard Jones, MD at finance provider Black Horse said the figures ‘reflect a natural market correction’ with new car sales beginning to balance out compared to last year’s declines but said there was still caution around diesel.
He said: ‘Confusion over fuel choice continues to cause a fall in sales of new diesels.
‘We’re seeing signs that the public policy debate on emissions and diesel is shifting to recognise the key issue of getting drivers into newer, cleaner cars irrespective of fuel type but we still have a long road ahead.
‘For example, how many people know you could drive a 4.5-litre Euro 6 diesel car into London’s low emissions zone without being charged?
‘Clarity for consumers around the diesel dilemma and fuel options overall will drive more informed purchasing decisions and help remove older more polluting vehicles from the UK’s roads.
‘The biggest difference we can make in the next five years is to accelerate the removal of these older cars and replace with newer Euro 6 technology.’
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