2018 new car sales fell at steepest rate since financial crisis

New car sales fell at steepest rate since financial crisis, FInancial TImes, Jan 2019

Dieselgate, Brexit uncertainty and supply bottlenecks lead to drop in new registrations

The sales of new cars in the UK last year fell at their sharpest annual rate since the financial crisis as a combination of Brexit uncertainty, the decline of diesel and new emissions tests chilled the market, according to final figures from the Society of Motor Manufacturers and Traders. Total new car sales fell by 6.8 per cent during 2018, the steepest annual pace of decline since 2008 and the second consecutive year of falling sales; new registrations fell by 5.7 per cent in 2017. Mike Hawes, chief executive of the SMMT, said the drop was due to a combination of new emissions tests leading to supply bottlenecks, diesel drivers holding on to their cars for longer and low consumer confidence. “Brexit is an issue,” he said, but he added that it would be “unfair to attribute [the decline] wholly to Brexit.” He said Dieselgate — the scandal that revealed widespread cheating in emissions testing by manufacturers — was probably the most significant factor as it was the only category in which sales dropped.

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Diesel sales were down 30 per cent on the previous year while petrol sales were up 8 per cent. Sales of alternative fuel vehicles, which includes electric cars and hybrids, were up by 21 per cent, from a much lower level. However, the decline of diesel and the popularity of sports utility vehicles meant the average car sold in Britain during 2018 emitted more greenhouse gases than those sold the year before. The amount of CO2 emitted by a new car was 3 per cent higher per kilometre travelled than the year before. It was the second consecutive rise in emissions following a 0.8 per cent annual rise in 2017.

You can see that this movement is not representative of France Tom Stokes The figures raise questions about whether the UK will be able to hit its targets of a 51 per cent reduction in carbon emissions by 2025. Transport became the biggest source of carbon emissions in the UK in 2016 as the adoption of renewables and the decline of coal-fired power station has helped make energy greener. Mr Hawes, chief executive of the SMMT, said the figures were “clearly going the wrong way”, although new, more stringent, measures of emissions known as the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) explained some of the increase. He also warned that government policy was playing a role, saying that the industry would like to see “a level playing field” for diesel and the government had removed some subsidies for electric cars.

Electric cars rose in popularity during 2018 but only accounted for about 0.7 per cent of the total market, up from 0.5 per cent the year before. The government cut the “plug-in car grant” by £1,000 in October and reduced the number of cars that would qualify. Diesel cars tend to emit less carbon dioxide than petrol cars, but after Volkswagen was found to have cheated on air pollution tests in 2015, diesel-fuelled vehicles have fallen in popularity and now faces higher rates of taxation. Mr Hawes said that the new testing regime and improved technology meant that diesel cars were now no worse for particulate matter than petrol cars but the industry faced a challenge to win back trust. The SMMT is forecasting a further 2 per cent decline in new car sales in 2019, but Mr Hawes said this relatively moderate decline was predicated on the assumption that there would be a Brexit deal. He described a no-deal Brexit as a “catastrophe” for the UK car industry. “If supermarket shelves are empty are you going to buy a new car?” he asked. Get alerts on UK business & economy when a new story is published Get alerts Copyright The Financial Times Limited 2019.