- UK new car market continues decline in October
- October 2018 new car sales drop -2.9% to 153,599 units.
- Hybrid and plug-in registrations up +30.7% – but probably due to rush to claim existing grant levels before cut
- Overall market down -7.2% YTD – SMMT believes gap to narrow slightly as supply issues ease from the regulatory changes
THE UK new car market continued its downwards trajectory in October.
The Society of Motor Manufacturers and Traders (SMMT) reported that 153,599 vehicles were registered, representing a fall of -2.9% in the month.
SMMT said that model changes and backlogs at test houses conducting new WLTP emissions certification had continued to cause shortages across some brands.
There were declines in both private and fleet sectors; registrations were down -1.0% and -5.2% respectively.
Diesel plunged again in October 2018 new car sales, SMMT blaming government policy for the -21.3% drop. Registrations of petrol cars rose +7.1%, while the market for alternatively fuelled vehicles (AFVs) once again showed strong growth, up +30.7%, supported by new models.
Zero emission battery electric vehicles saw particularly impressive growth, up +86.9%: compared with this time last year 584 more were registered.
Hybrid and plug-in hybrid vehicles, which make up the majority of AFV sales, also enjoyed strong uplifts, growing +31.0% and +19.1% respectively.
The SMMT said tha it was not surprising given the announcement that the Plug-in Car Grant was to be cut for pure electric cars and withdrawn completely for plug-in hybrids – although, due to lead times, the full impact may not be seen for several months.
The figures come as SMMT publishes new industry forecasts for AFV demand, with registrations expected to grow +82.5% from 2017 levels by 2020.
Similar growth (+88.3%) is projected for plug-in electric cars, with 92,620 new plug-in hybrid and battery electric cars expected to be sold in the same year – taking market share to around 4.0%.2 This is at the lower end of government’s 3-7% stated ambition, with cuts to the Grant further undermining industry’s ability to deliver this ambition.
In the year to date, the overall new car sector remains down -7.2% on the same period last year. SMMT suggested that, pending no further market disruption, some pull-back was to be expected during the remainder of the year.
Mike Hawes, SMMT Chief Executive, said:
“VED upheaval, regulatory changes and confusion over diesel have all made their mark on the market this year so it’s good to see plug-in registrations buck the trend. Demand is still far from the levels needed to offset losses elsewhere, however, and is making government’s decision to remove purchase incentives even more baffling.
“We’ve always said that world-class ambitions require world-class incentives and, even before the cuts to the grant, those ambitions were challenging. We need policies that encourage rather than confuse. Government’s forthcoming review of WLTP’s impact on taxation must ensure that buyers of the latest, cleanest cars are not unfairly penalised else we will see older, more polluting cars remain on the road for longer.”
Ashley Barnett, Head of Consultancy at Lex Autolease, said:
“As it stands, company car drivers who renew now are doing so without knowing the tax consequence beyond 2021.”
“It is positive that more clarity will come in spring, but the uncertainty in the interim will make it difficult for drivers and fleet decision makers to commit to fleet replacements.
“We recommend that fleet operators consider extending existing agreements until the outcome of the WLTP consultation is known, or consider electing for an interim three-year replacement cycle.”
“This would give them a clearer insight into the tax regulations beyond 2021 and most likely a better view of the additional zero-emission technology that will be available the next time they renew. There may be an extra cost in the short term, but these measures would leave their fleet better placed to adopt newer, cleaner technology in 2021.
“Alternatively, employees may decide that company cars are unattractive in light of this tax uncertainty, the unintended consequence being that many may be pushed towards a less-regulated grey fleet environment. In this scenario, higher emissions and safety issues create new challenges, and progress against the government’s Road to Zero strategy is slowed.
“With emissions targets in mind, it’s disappointing to have seen a month-on-month decline in plug-in vehicle registrations, especially following the news that the new, lower rate for the Plug-in Car Grant has been brought forward – which is likely to impact this market further.”
Justin Benson, Head of Automotive at KPMG, added:
“The UK’s automotive sector is in a transition phase. We are seeing a rebalancing of consumer demand, as new regulations and the perception of diesel are driving different consumer behaviours, with some moving away from diesel vehicles.”
“However, those looking to change their vehicle may not want to rule out new diesel models, some of which are producing fewer toxic emissions than their petrol counterparts. These vehicles will be a viable choice for consumers for some time, particularly as the deals on offer continue to be attractive.”