Diesel downturn to drive further fall in sales of new cars

Predictions of a decline of up to 7% in 2018 follow first fall in sales in six years

Sales of new cars are set to reverse further this year, led by a slump in demand for diesels, as consumers continue to tighten their belts.

Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, is predicting a fall in UK registrations of up to 7 per cent.

He described 2017 as a “very, very volatile year” after it emerged yesterday that new car sales fell 5.7 per cent last year amid falling business and consumer confidence.

Some 2.54 million new cars were registered in 2017 compared with 2.69 million the previous year – marking the first fall in annual sales for six years.

December saw an even sharper decline of 14 per cent, while demand for diesel models dived 31 per cent last month and 17 per cent over the year.

Hawes also revealed that uncertainty over transitional arrangements following the UK’S withdrawal from the European Union in March 2019 had caused some manufacturers to delay investment decisions.

If there is no clarity by the end of March they will have to start implementing “contingency plans” which could harm funding for UK operations, he added.

Asked about the decline in diesels, Hawes claimed “confusing anti-diesel messages have caused many to hesitate before buying a new low emission diesel car”.

Rather than choosing alternatives, many people are “just sitting on their hands”, he observed.

Alex Buttle, director of car buying comparison website Motorway.co.uk, described 2017 as “a year to forget for the UK car industry”.

He said: “You’d have to dig pretty deep to find anything positive to take from the past 12 months which has seen diesel demonised in the media on a weekly basis.

“As sales of new diesels continue to fall, 2017 could well mark the end of one era of motoring and the dawn of a new one, as hybrid and electric sales start to take off.”

Simon Benson, head of motoring services at AA Cars, said: “December marks the ninth month of falling registrations since the vehicle excise duty [car tax] changes came into force in April. Perhaps more disconcertingly, 2017 denotes the first annual downturn in new car sales since 2011.

“And with uncertainty still rocking the market, we don’t expect to see this trend reverse for some time yet.”

In November’s Budget, Chancellor Philip Hammond announced a tax hike on new diesel cars from 1 April. All diesels are expected to be subjected to a one-band increase in the first-year VED rate.

At the same time, governments on both sides of the Border have announced plans to ban the sale of all conventional diesel and petrol powered cars over the next couple of decades in a bid to meet European Union limits on nitrogen dioxide pollution.

Alternatively-fuelled vehicles reached a record market share of 4.7 per cent last year.

sreid@scotsman.com