Diesel suffers as new car sales continue to fall

New cars sales in the UK have fallen for the third month in a row as the market continues to feel the effects of tax changes and political and economic uncertainty.

New registrations dropped by 4.8 per cent in June, according to data from the Society of Motor Manufacturers and Traders (SMMT) - a slower decline than in the previous two months.

Diesel sales bore the brunt of the fall again, down 14.7 per cent while petrol sales grew 2.5 per cent and alternative fuelled vehicles soared by 29 per cent.

The continued backlash against diesel as well as economic uncertainty caused by Brexit and the General Election have been blamed for the decline in sales, along with changes to vehicle excise duty in April that pushed up the running costs of most new cars.

The SMMT said the latest figures showed a stabilisation in the market after a record first quarter and two months of dramatic decline but some commentators have warned that the drop-off could continue.

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.”

However, John Leech, head of automotive at KPMG UK was less optimistic.

He said: “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.

“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.

“As these headwinds continue to impact the UK market we forecast a five per cent decline in the new car market during the second half of 2017.”

A total of 243,454 new cars were registered in June, with superminis and small family cars accounting for almost 60 per cent of the market. The data shows that small family cars and SUVs were the only two segments to register growth in June, up six per cent and 11.3 per cent respectively.

VW’s Golf finally ended the Ford Fiesta’s reign at the top of the bestseller list, but only by 208 units. And the Fiesta remains the best seller overall for the year to date.