Brexit warning as car sales stay stuck in reverse

A no-deal Brexit would be a “catastrophe” for the car industry, bosses have reiterated, as it was confirmed that sales of new motors had fallen by almost 7 per cent last year.

Some 2,367,000 cars were registered across the UK in 2018, down by more than 173,000 on the previous year, according to trade body the Society of Motor Manufacturers and Traders (SMMT), which it said had reflected “12 months of turbulence”.

SMMT chief executive Mike Hawes predicted a 2 per cent drop in demand this year, but insisted sales remained “on a par” with the average over the past ten to 15 years.

He warned that a drop in consumer confidence linked to Brexit, concern about diesels and the impact of a new testing regime were all having a negative effect on the market.

“The challenges before us are something of a perfect storm,” Hawes said. “It’s causing considerable worry and agitation across boardrooms both in the UK and abroad.”

He said it would be “unfair” to attribute the entire fall in demand to fears over the UK’s withdrawal from the EU, but noted that falling consumer confidence had reduced people’s inclination to make a big-ticket purchase.

A no-deal Brexit would be a “catastrophe for the industry”, Hawes warned, adding that while the Prime Minister’s agreement with the EU was “not a perfect deal”, it would provide the transition period the automotive sector needs.

Demand for diesels tumbled 30 per cent last year. Some diesel car owners are switching to petrol (up 9 per cent) or alternatively fuelled vehicles (up 21 per cent) such as plug-in hybrids or pure electrics, but most holding on to their existing cars.

The best-selling car last year was the Ford Fiesta, with almost 96,000 registered, followed by the Volkswagen Golf and the Vauxhall Corsa in second and third spots. The British-built Nissan Qashqai was the fourth best-seller while the Mini, built at a plant in Oxford, took seventh place.

Howard Archer, chief economic advisor to the EY Item Club think-tank, said it had been a disappointing end to “a year to forget for new car sales”.

He added: “Manufacturers and dealerships will be fervently hoping that the sales lost since September due to the shortage of available new cars will eventually be fully made up rather than some being lost completely.

“However, there are significant challenges facing the car sector that may constrain sales in 2019 even as the supply problem eases.

“Car manufacturers have been particularly vociferous over the impact that a no deal Brexit could have in disrupting their supply chains,” he added.

Alex Buttle, director of car buying comparison website Motorway.co.uk, said: “If ever there was a year to file away and forget about, 2018 was that year for the UK car industry.

“A toxic mix of plummeting diesel sales, fractured consumer confidence, revised emissions standards and ongoing Brexit uncertainty hit new car sales like a sledgehammer. The only slight positive to draw out of a year of lows was the growth in electric and hybrid car sales, despite the government deciding to cut plug-in grants.”