Slump in UK car sales deepens as industry records 12% fall

New car sales have declined for the seventh month in a row, falling more than 12% in October as worsening confidence among consumers and businesses continues to dampen the market.

The figures show that the car market is on course for its first annual decline since 2011 and will continue to fall next year before stabilising in 2019, according to the Society of Motor Manufacturers and Traders (SMMT).

The industry body said car registrations dropped 12.2% year-on-year to 158,192 last month – the second double-digit decline this year. It is an acceleration from the 9.3% fall in car sales in September, the first time the market had declined in September in six years. In April, sales plummeted 19.8% after an increase in vehicle excise duty.

Diesel sales tumbled by nearly 30% last month after the scandal over rigging emissions tests and political rumblings over restrictions on diesel cars. Demand for electric and hybrid cars continued to rise, up by nearly 37% to 8,244, while petrol models posted a small increase of 2.7%.

Mike Hawes, the SMMT chief executive, said: “Declining business and consumer confidence is undoubtedly affecting demand in the new car market, but this is being compounded by confusion over government policy on diesel. Consumers need urgent reassurance that the latest, low-emission diesel cars on sale will not face any bans, charges or other restrictions, anywhere in the UK.”

Alluding to last year’s Brexit vote, the industry body has blamed business and political uncertainty for reduced buyer confidence, deterring households and businesses from big ticket purchases.

Ana Nicholls, automotive analyst at the Economist Intelligence Unit, said: “It’s not just a question of drooping consumer confidence – the economics of the car market have also changed in the past few months. With the pound so low, carmakers can no longer afford to use the kind of discounting and offers they have been using to keep the market buoyant.”

She said the Bank of England’s interest rate rise last week would not help either, with 86% of all cars bought on credit – many of them on personal contract plans – and total car loans now amounting to nearly £60bn.

The SMMT figures came as the British Retail Consortium reported that the key pre-Christmas period had started poorly for high street stores and online traders, with the worst sales since 2011.

 

 

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