Rise in July new car sales fails to offset 2018 decline
AN UPTICK in the number of new cars sold to private and fleet drivers in July was not enough to slow the longer-term decline in the market.
New car registration data – a proxy for sales – showed the overall market in July recorded a 1.2pc annual rise to 163,898. However, on a year-to-date basis the figures collated by the Society of Motor Manufacturers and Traders (SMMT) showed a 5.5pc drop to 1,477,892 registrations in the first seven months of the year. This is in line with the industry’s forecast for the year, which predicts about 2.4m cars will be sold in 2018.
Sales to private buyers edged up 0.1pc in July to 67,772, while fleet sales – which include rental companies – were 2.6pc stronger at 91,542. The smaller company car market fell 10.2pc to 4,584.
The long-term decline has been partly driven by motorists shying away from diesel vehicles in the wake of the Volkswagen scandal, which first broke in late 2015. Diesel had about half of the UK market then but demand for vehicles powered by the fuel has since plunged. Ministers are also trying to discourage people from buying diesel cars, saying they are more polluting than petrol – something the industry disputes.
Motorists have held off buying replacement vehicles, fearing they could be hit with new punitive taxes on the fuel. As a consequence, in the year to date, diesel made up just 32.5pc of the total market, with sales falling 24.4pc in a year. Petrol has taken up most of the slack, rising to 61.8pc market share, but environmentally friendly “alternatively fuelled vehicles” (AFVS), such as hybrid and electric, have been the biggest beneficiary.
In the seven months to the end of July, their market share rose 23.8pc on an annual basis, to account for 5.7pc of new vehicles registrations.
Last month the Government launched its “Road to Zero” policy, which aims to slash vehicle emissions by encouraging AFVS with the development of charging infrastructure. This builds on the announcement last summer that by 2040 sales of new petrol and diesel cars will be banned. Howard Archer, economist at the EY Item Club, said wider concerns about the country’s financial health worries were also contributing to the sales declines, with earnings growth weakening in April and May, and consumer confidence dipping in July.
In March the Bank of England warned lenders to tighten credit checks, saying even “the slightest sign of rough weather” in the economy could put a “significant” number of households in distress. “The Bank wants to see the same in the car industry,” Mr Archer said.