Faltering diesel demand and Brexit drags UK new car sales down 7% in 2018

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Demand for new cars fell by 7% last year - the most significant decline in sales since 2008


Sales of new cars in the UK last year fell at their fastest rate since the global financial crisis a decade ago, new official figures will confirm later today.

The Society of Motor Manufacturers and Traders (SMMT) reported a near seven per cent decline in registrations, with 2.37 million new models hitting UK roads in 2018.

The motor industry body said the decline was due to a continued slump in demand for diesel cars, supply restrictions caused by the introduction of stricter emissions rules and waning consumer confidence ahead of Brexit.

Demand for new cars fell by 7% last year - the most significant decline in sales since 2008

Demand for new cars fell by 7% last year – the most significant decline in sales since 2008

Provisional figures show around 2,366,000 new cars were registered in 2018, down more than 174,000 on the previous year.

It’s the most significant fall in new vehicle registrations since sales nosedived by 11.3 per cent in 2008 when the financial crisis crippled consumer spending.  

SMMT chief exeuctive Mike Hawes described the year as ‘highly turbulent’, but insisted that sales were ‘on par’ with the average over the last 10 to 15 years.

That said,  he predicted a further two per cent drop in demand this year.

Anchoring the performance of motor dealers for the second year running was the dramatic decline in diesel sales.

With the public stepping away from the under-fire fuel type en masse, registrations were down almost 30 per cent on the year before. 

Diesel had, in 2016, accounted for 48 per cent of all new cars sold in the UK. 

However, the VW emissions cheating scandal and the threat of surcharges and taxation the fuel type drop to 42 per cent market share in 2017 and less than a third (32 per cent) last year, mirroring a trend seen in many European markets.

The rise in petrol sales and drop in diesel also means the average CO2 emissions of new cars sold in Britain in 2018 rose by just under three per cent, posing a headache for automakers who need to reduce levels to meet stricter regulations. 

These new tougher emissions mandate introduced in September also took a toll on showroom activity.

The continued slump in diesel demand had a huge toll on the market, and also resulted in a 3% rise in CO2 emissions for new models sold last year

The continued slump in diesel demand had a huge toll on the market, and also resulted in a 3% rise in CO2 emissions for new models sold last year

The continued slump in diesel demand had a huge toll on the market, and also resulted in a 3% rise in CO2 emissions for new models sold last year

Supply of the latest vehicles was restricted as car makers attempted to update their ranges to adhere to the stricter CO2 limits.

With some brands having to seek new accreditation under the tougher WLTP (Worldwide Harmonised Light Vehicle Test Procedure) rules introduced under EU law, the availability of some models from August until the end of 2018 were limited. 

The industry representative claimed that Britain’s departure from the European Union had also had a bearing on the market.

Throughout last year, it said demand for new cars was being crippled by Britons fear that tariffs could be introduced after Brexit.

If that were to be the case, we should expect to see an increase in demand for new models in the opening three months of 2019 as motorists scramble to purchase cars at tariff-free prices.

But the SMMT warned that Brexit risks the future of the sector which employs over 850,000 people and has been one of Britain’s few manufacturing success stories since the 1980s.

‘It’s still hard to see any upside to Brexit,’ said SMMT chief executive Mike Hawes.

‘Everyone recognises that Brexit is an existential threat to the UK automotive industry and we hope a practical solution will prevail,’ he said, calling for lawmakers to back Prime Minister Theresa May’s deal to guarantee a transition period.

Investment looks very likely to have fallen in 2018 and sales this year are forecast to drop again as the SMMT warned a no-deal Brexit would hit jobs.

‘You’re not going to see immediate closure of plants but what you could see is a reduction in production volumes and certainly, these are often international companies who have alternatives,’ said Hawes.

It's the second consecutive year of declining demand after UK vehicle registrations were at record highs in 2015 and 2016. The SMMT predicts another 2% decline this year

It's the second consecutive year of declining demand after UK vehicle registrations were at record highs in 2015 and 2016. The SMMT predicts another 2% decline this year

It’s the second consecutive year of declining demand after UK vehicle registrations were at record highs in 2015 and 2016. The SMMT predicts another 2% decline this year

It’s the second consecutive year of falling demand for new cars in the UK following a period of unprecedented levels of registrations.

After record highs in 2015 and 2016, demand fell in 2017 by 5.7 per cent and some analysts see car demand as a leading indicator which could be a harbinger for future economic performance.

Britain’s economy slowed to a crawl at the end of 2018, the housing market is stalling and lending to consumers growing at its slowest pace in nearly four years, according to data released on Friday.

The complete figures for 2018 will be released later this morning.

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