‘Recession’ fears for new car market

Diesel sales have slumped in the wake of the VW emissions scandal and amid fears of extra taxes. Picture: Contributed
Diesel sales have slumped in the wake of the VW emissions scandal and amid fears of extra taxes. Picture: Contributed
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Fears have been raised over the health of the motor retailing industry after sales of new cars reversed for a sixth consecutive month.

Consumer concerns over Brexit and the prospect of higher interest rates, steeper car tax bands and a dramatic slump in the sale of diesel-fuelled motors lay behind a 9.3 per cent slide in new car registrations during September – traditionally one of the busiest months due to the twice-yearly licence plate change.

Releasing the latest industry figures, Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said the decline would “cause considerable concern”.

The latest fall means that some 2.07 million cars have been registered so far this year across the UK, a decrease of almost 4 per cent on the same period in 2016.

Demand for diesel motors continued to drop sharply – down 21.7 per cent, year-on-year, in September and 13.7 per cent for the year so far.

Governments on both sides of the Border have recently announced plans to ban the sale of all conventional diesel and petrol powered cars over the next couple of decades in a bid to meet European Union limits on nitrogen dioxide pollution.

Ministers are also considering funding measures to cut pollution with a tax on new diesel vehicles.

Hawes said: “Business and political uncertainty is reducing buyer confidence, with consumers and businesses more likely to delay big-ticket purchases.

“The confusion surrounding air quality plans has not helped, but consumers should be reassured that all the new diesel and petrol models on the market will not face any bans or additional charges.

“Manufacturers’ scrappage schemes are proving popular and such schemes are to be encouraged given fleet renewal is the best way to address environmental issues in our towns and cities.”

Alex Buttle, director of car buying comparison website Motorway.co.uk, said: “After two successive quarters of decline in car sales, the UK’s new car market is officially in recession.

“There’s no doubt that the new diesel car market is being destroyed by diesel scrappage schemes and upcoming toxin taxes. And with Brexit fears likely to keep hampering consumer confidence in the short term, the new car market has a fight on its hands to recover.”

Jim Holder, editorial director of What Car? magazine, said: “The fundamental risk is that the car industry, booming up until just six months ago, is experiencing a shock that is too great to stem.

“The bad news is coming from many directions, and the shockwaves will impact from the new to the used car market.”

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