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UK car sales set for first annual decline since 2011 after September slump

UK car sales set for first annual decline since 2011 after September slump
October 5, 2017

LONDON (Reuters) - British new car registrations on Thursday appeared on course for their first annual fall since 2011 after a 9.3 percent tumble in September, a month which normally accounts for around 15 percent of demand.

Sales were hurt by business and political uncertainty as Britain prepares to leave the EU and confusion over government plans on diesel and petrol cars, which could include new levies or restrictions, the Society of Motor Manufacturers and Traders (SMMT) said.

Sales totalled 426,170 vehicles with demand falling across the board, SMMT data showed, leaving year-to-date registrations down 3.9 percent.

“This decline will cause considerable concern,” SMMT Chief Executive Mike Hawes said.

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

Demand has fallen year on year since April due to a combination of factors including an increased vehicle excise duty, weaker consumer confidence and record sales in 2015 and 2016

But September is normally a strong month for car sales, partly due to the fact licence plates indicating the age of a vehicle change on March 1 and Sept. 1.

Demand for diesel cars slumped 21.7 percent and petrol fell 1.2 percent. Sales to fleet business buyers declined 10.1 percent and to consumers fell by 8.8 percent.

Howard Archer, chief economist at consultancy EY ITEM Club, said the decline in fleet demand, which accounts for around half of all car demand, was of particular concern.

“This indicates that businesses have become more reluctant to replace or add to their fleets amid weakened economic activity and a highly uncertain outlook,” he said.

Only demand for alternative fuel vehicles, namely electric and hybrid plug-in vehicles, rose, increasing by 41 percent albeit from a very low base. The depth of the slump in September comes despite almost all major car companies offering thousands of pounds off new models with scrappage schemes, trade-in programmes and discounts.