New car market goes into reverse ahead of tax changes

Vauxhall's Corsa was the best-selling model north of the Border last month. Picture: Contributed
Vauxhall's Corsa was the best-selling model north of the Border last month. Picture: Contributed
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Sales of new cars performed an “emergency stop” last month following March’s bumper numbers ahead of a major shake-up in vehicle excise duty.

Industry figures revealed a double-digit slump in vehicle registrations during April, though bosses put a brave face on the downturn, saying conditions were likely to stabilise over the coming months.

We expect demand to stabilise as the turbulence created by these tax changes decreases

Mike Hawes

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Across the UK, new car sales fell by almost 20 per cent, year-on-year, as the market felt the effect of the sweeping tax changes.

There were 152,076 motors registered in April, trade body the Society of Motor Manufacturers and Traders (SMMT) said, while a Scottish break-out highlighted a 17.5 per cent decline compared with April 2016.

Many buyers brought forward purchases to March, ahead of new vehicle excise duty rates coming into force on 1 April, according to the SMMT.

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All new cars, except for those with zero emissions, are now subject to an annual flat rate charge. RAC research found the vast majority of drivers buying new cars are paying significantly more following the change.

Sandy Burgess, chief executive of the Scottish Motor Trade Association, said: “With the strong March and the added incentive of beating the new rules on vehicle excise duty coming into play on the first of April there was always going to be something of an ‘emergency stop’ in the results.

“The tail-off was evident across our dealers’ showrooms and even online enquiry levels have softened.”

But he added: “Given the strength of the new car market over the first four months of the year with numbers still up on 2016 by 1 per cent, the retailers have fantastic levels of outstanding pre-owned vehicles and the message we are hearing is still a very encouraging business as usual for anyone looking to change their ­current vehicle.”

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SMMT chief executive Mike Hawes added: “It’s important to note that the market remains at record levels as customers still see many benefits in purchasing a new car. We therefore expect demand to stabilise over the year as the turbulence created by these tax changes decreases.”

During April, the best-seller UK-wide was the Ford Fiesta, while the Vauxhall Corsa took the number one spot north of the Border.

Simon Benson, director of motoring services at used car website AA Cars, said: “While a drop-off was anticipated, for the April figures to have declined by a fifth will have caught some in the industry by surprise.

“With consumers turning away from the new vehicle market, the knock-on effect of this could prove to be an enormous opportunity for used car dealers.”

Shaun Armstrong, head of finance firm Creditplus.co.uk, said: “The VED tax changes clearly contributed to a rush of new registrations in March and an inevitable lull in April.”

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