Demand for new cars reversed 4.1 per cent last month, marking the weakest July market since 2012, despite a surge in sales of pure electric vehicles.
Just over 157,000 new cars were registered across the UK compared with 164,000 during July 2018, according to industry body the Society of Motor Manufacturers and Traders (SMMT). It was the fifth consecutive month of decline.
The SMMT said consumer and business confidence continued to be impacted by confusion over government policy towards different fuel types, as well as political and economic uncertainty.
Sales of diesel models slumped 22.1 per cent but demand for petrol cars nudged up 2.6 per cent.
Battery electric car sales surged 158.1 per cent, though they still account for just a fraction of the overall market, while registrations for hybrid cars that cannot be plugged in grew 34.2 per cent. However, the plug-in hybrid sector fell by 49.6 per cent.
Government grants for new low-emission cars were slashed in October last year, meaning hybrid models are no longer eligible for the scheme.
SMMT chief executive Mike Hawes said: “Despite yet another month of decline in the new car market, it’s encouraging to see substantial growth in zero-emission vehicles.
“Thanks to manufacturers’ investment in these new technologies over many years, these cars are coming to market in greater numbers than ever before.
“If the UK is to meet its environmental ambitions, however, government must create the right conditions to drive uptake, including long-term incentives and investment in infrastructure.”
Alex Buttle, director of car selling comparison website Motorway.co.uk, said: “It reflects the depressed state of the UK car industry that a 4.1 per cent fall in new car sales doesn’t set alarm bells ringing.
“The reality is, the domestic industry is badly struggling and the trends we’re seeing month on month have become so commonplace that there were no real surprises in the July figures.
“With plug-in hybrids slumping after the government grant removal, this feels like electric’s moment and car buyers seem to agree.
“While a 1.4 per cent market share for battery electric vehicles is small in proportional terms, this level of growth is what we should expect now consumers have made the emotional switch away from dirtier diesel and vanilla petrol models.”
James Fairclough, chief executive of AA Cars, said: “It’s disappointing to see new car registrations decline yet again, but thankfully it’s not all doom and gloom.
“Following last month’s drop in sales of hybrid electric vehicles, we are delighted to see demand for these more eco-friendly vehicles is back on track.
“It’s also great to see that demand for battery electric vehicles is continuously rising.
“The overall decline in new registrations is due to a uniquely diverse set of pressures on the new car market, one of which is the UK’s acute political uncertainty. The lack of clarity about Britain’s future – both economic and political – is prompting some would-be car buyers to hold back.”
Sean Kemple, director of sales at Close Brothers Motor Finance, added: “The motor industry is rolling with the punches in the climate of political uncertainty, an uncertain global market, and the continuing problems caused by WLTP.
“But despite the overall fall in car registrations, we are seeing pockets of increased sales. Demand for electric and hybrid vehicles continues to rise, as buyers look toward a greener future and as the range of choice on offer continues to grow.
“This will only roll on and on as the industry landscape completely transforms. Jaguar Land Rover’s recent announcement to invest heavily in this is testament to this fact, with other similar announcements no doubt on the way. Dealers mustn’t be put off by the bumps in the road, but should focus their attention on the vehicles which are performing best.”