Diesel takes a knock but new car sales accelerate – Telegraph.co.uk

Posted: Tuesday, October 06, 2015

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The number British motorists choosing diesel-powered cars has dropped to its lowest level in more than two years in the wake of Volkswagen scandal.

Revelations that the German car giant cheated in emissions tests only emerged in late September, but official figures for car sales for the whole month signal that it was enough to make drivers reconsider their engine choice when buying a new vehicle.

New car registrations data – a proxy for car sales – from the Society of Motor Manufacturers and Traders (SMMT) for September show that diesel’s market share was 45.9pc, a drop of 3 percentage points on the previous month and 2 percentage points on the same point a year ago.

Registrations of petrol-powered vehicles rose 2.7 percentage points on August’s level to 51.4pc of the market, while sales of alternatively fuelled vehicles (AFVs) edged up to 2.6pc from 2.4pc the previous month.

VW’s admission that as many as 11m vehicles worldwide could be fitted with “defeat devices” which detect when a car is being checked and switch on full emissions controls to beat the tests caused the German company’s share price to collapse, as investors digested the potential for multi-billion dollar fines in the US, where the scandal first broke on September 18.

The shares plunged further as chief executive Martin Winterkorn stepped down and the company issued a profit warning as it set aside €6.5bn (£4.7bn) to cover the cost of the crisis.

Mike Hawes, chief executive of the SMMT, said: “It is too early to say how VW’s troubles affected sales, it only started 10 days before the end of the month and many of September’s sales are made months in advance. October’s figures will show how big an issue the VW story will be for consumers with it having been a full month since it happened.

“However, the market is still strong and although there is a lot of interest in VW’s problems it is wrong for that to spread to other companies in the industry. VW has admitted it cheated and is paying a heavy price… it saw that the trust it had established with consumers over years can be lost in a day.”

Sales of VW cars were 39,263 in September, a rise of 3.7pc compared with the same month a year ago. However, this was significantly below the 14.3pc rise recorded in the preceding year, hinting that buyers could be responding to the VW scandal by shying away from the brand.

The performance of other brands from the VW stable – Audi, Seat and Skoda was mixed. Audi’s sales for the month jumped 11.4pc, reversing the 1.1pc drop seen a year ago, Seat suffered a 9.8pc drop in the most recent numbers compared with a 12.9pc rise 12 months before, and Skoda sales rose 3.6pc, compared with a 5.9pc increase a year ago.

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Mr Hawes added that “customer demand for diesel remains strong”, and the total amount of diesels sold in September was 4.1pc higher than a year ago. Petrol sales rose 12.3pc and AFVs were 21.7pc higher.

This reflects the UK’s auto industry’s continued renaissance, which has now grown for 43 months running. A record 462,517 new cars were registered in September – a key month for auto sales as the number plate updates. Sales grew 8.6pc compared with the same month last year and the total amount of cars sold so far this year hit 2,096,886, the strongest performance in over a decade.

How long the growth can continue was impossible to predict, according to Mr Hawes, who added: “It can’t last forever and it won’t be a severe drop off but I’ve given up trying to forecast when the market will slow.”

Industry analysts were sceptical about whether the VW scandal has impacted diesel sales and VW’s performance in particular.

“The last Labour government put in place incentives to encourage diesel and those have now fallen away,” said Phil Harrold, automotive partner at PwC. “Technology in petrol cars has also caught up with diesel to improve performance.”

However, motorists are more likely to be driven by finance than environmental friendliness when picking a car.

“I don’t think consumers will think much about it – the desire to save the planet is not at the forefront of people’s minds when making a car purchase.”

Rank Model Sept sales Model Year to date sales
1 Ford Fiesta 22807 Ford Fiesta 108054
2 Vauxhall Corsa 15670 Vauxhall Corsa 72835
3 Ford Focus 14258 Ford Focus 69053
4 VW Golf 13603 VW Golf 59200
5 VW Polo 11026 Nissan Qashqai 49715
6 Nissan Qashqai 10119 VW Polo 45537
7 Mini 8754 Vauxhall Astra 42687
8 Vauxhall Astra 7920 Audi A3 38253
9 Vauxhall Mokka 7670 Mini 35679
10 Fiat 500 7460 Mercedes C-Class 35505

However, the continuing sales growth could be coming at dealers’ expense, according to Ian Gilmartin, Barclays’ head of retail and wholesale.

“September is always a crucial month for the motor industry, and following a difficult couple of weeks, this positive data will rightly be welcomed,” he said. “However, we need to ensure that increasing registrations translate to good results in the showrooms and forecourts. Margin pressure is a growing concern for some dealers.”

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