Car firms fear ‘deep recession’ is round corner as sales fall again
SALES of new cars have continued to tumble as economic uncertainty in the wake of the EU referendum has put potential customers off making big purchases.
Official data on the number of cars registered in July show a 9.3pc decline compared with the same month a year ago. Just 161,997 cars were registered last month, the fourth consecutive month of decline in a trend that is sounding alarm bells in the industry.
According to figures from the Society of Motor Manufacturers and Traders (SMMT), registrations, a proxy for sales of new cars, declined 4.8pc in June. This follows a drop of 8.5pc in May and a 19.8pc plunge in April.
The industry had been expecting a fall in April as new Vehicle Excise Duty rules aimed at encouraging the purchase of zero emission cars came into force, “pulling forward” sales into March as drivers raced to beat the new regime. This meant new car registrations in March jumped 8.4pc to 562,337 – a new record. Concerns about future regulation of the industry have put a further brake on sales, with the Government earlier this month announcing all new cars with only diesel or petrol engines would be banned from 2040.
The latest decline in sales led the SMMT to renew its calls for the Government to provide clarity on what leaving the UK is likely to mean, with the industry having calculated a “hard Brexit” could add £1,500 to the price of a car sold in the UK.
Mike Hawes, SMMT chief executive, said: “The fall in consumer and business confidence is having a knock on effect on demand in the new car market, and government must act quickly to provide concrete plans regarding Brexit.”
Concerns about Brexit and the impact it could have on automotive manufacturing in the UK mean the industry has all but given up on its target of building two million cars a year in British plants by 2020.
Alex Buttle, director of car-buying comparison website Motorway, said 2017 was “starting to feel like the auto industry’s annus horribilis”.
He said: “This could be the beginning of a deep recession for the new car industry, the likes of which we haven’t seen since the credit crunch.”