New car sales in the UK have fallen for the fourth month running, as Brexit uncertainty weighs on demand and buyers shun diesel cars in greater numbers.
Sales fell 9.3% in July to 161,997 new cars as consumers and businesses grew increasingly reluctant to commit to major spending decisions.
“The fall in consumer and business confidence is having a knock-on effect on demand in the new car market and the government must act quickly to provide concrete plans regarding Brexit,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, which published the figures.
Sales of diesel cars were down by a fifth in July compared with a year earlier, to 69,157. Hawes blamed uncertainty over clean-air plans in the UK, after the government announced proposals to ban all new petrol and diesel cars and vans from 2040 amid fears that rising levels of nitrogen oxide posed a major risk to public health. Sales of new petrol cars were also down in July, falling 3% to 83,969.
While diesel and petrol sales fell in July, there was a sharp rise in the sale of new alternatively fuelled vehicles, up 65% compared with the same month last year to 8,871. AFVs accounted for 5.5% of all new car sales in July, which was a record high.
The fall in new car sales in recent months has brought to an end to five years of growth – fuelled by cheap car finance deals – which has helped to underpin the consumer-led growth in the wider economy.
However, household budgets are coming under renewed pressure as prices rise faster than wages, signalling a return to the fall in real pay that hit workers in the aftermath of the financial crisis.
The Bank of England said on Thursday that businesses were also less willing to spend money at a time of persistent uncertainty over Britain’s future relationship with the EU.
New car sales are now down 2.2% in 2017 so far, to 1.56m. The SMMT is forecasting a 2.6% drop in sales in 2017 overall, following a record 2.6m registrations in 2016. In July, sales fell across the UK, by 13.7% in Scotland, 12.5% in Wales, 9% in England, and 2.3% in Northern Ireland.
Alex Buttle, director at car buying comparison website Motorway.co.uk, said the industry could be heading for a sharp downturn. He said: “2017 is starting to feel like the auto industry’s annus horribilis. 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.
“Diesel D-day might be over 20 years away, but we could see new car sales continuing to fall by 10-20% a month in the near term. After all, who is going to want to buy a diesel car now – especially with the prospect of paying a hefty toxin tax in the future and falling resale values?”
Hawes said weaker demand for new cars should result in some cheap deals for consumers. “The lower demand in recent months will inevitably mean competition from manufacturers will intensify and it will be a good opportunity for consumers to get a great deal on their next car.”
The National Franchised Dealers Association said the government would need to invest more in electric vehicle infrastructure, such as car charging points, to meet growth in the alternative fuel market.
The top three bestsellers in July were the Ford Focus, Volkswagen Golf, and Nissan Qashqai.
Bestsellers July 2017
- Ford Focus: 5,251
- Volkswagen Golf: 5,236
- Nissan Qashqai: 4,640
- Ford Fiesta: 3,372
- Volkswagen Polo: 3,227
- Kia Sportage: 3,155
- Mercedes-Benz C Class: 2,828
- Vauxhall Corsa: 2,819
- Mercedes-Benz A Class: 2,809
- Audi A3: 2,607
- Ford Fiesta: 62,752
- Ford Focus: 45, 296
- Volkswagen Golf: 41, 939
- Nissan Qashqai: 38, 214
- Vauxhall Corsa: 36,379
- Vauxhall Astra: 34,875
- Volkswagen Polo: 30,432
- Mercedes-Benz C Class: 30,214
- Mini: 27,636
- Mercedes-Benz A Class: 25,753