New car sales plummet due to ‘perfect storm’

Sales of new cars dropped by 7% last year, as experts warn the industry faces a “perfect storm” of challenges that could fuel a further decline.

Around 2.37 million new cars were registered in the UK, down more than 173,000 on 2017.

Mike Hawes, chief executive of trading body the Society of Motor Manufacturers and Traders (SMMT), described 2018 as “highly turbulent” but insists sales were in line with figures from the past decade.

He warned, however, that concerns over diesels and decreasing consumer confidence linked to Brexit could hit the industry this term, with SMMT predicting a further 2% drop in demand.

According to Mr Hawes these challenges are causing “considerable worry and agitation across boardrooms both in the UK and abroad.”

He said a no-deal Brexit would be a “catastrophe for the industry” and that while the Prime Minister’s deal with the EU isn’t perfect, it would provide the transition period the industry needs.

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While falling consumer confidence had limited purchases of big ticket items like cars, it would be unfair to blame the drop in demand entirely on Brexit, Mr Hawes added.

He said the “lingering sense of uncertainty” surrounding diesel vehicles is also a factor, leaving consumers unsure as to how diesels will be taxed and treated.

Demand for diesel vehicles slumped by 30% last year, with some diesel owners switching to petrol vehicles (up 9%) or low-emissions vehicles (up 21%).

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Mr Hawes also questioned the government’s decision to cut grants for low-emission cars, claiming it “doesn’t really send the sign to the consumer that these are the right vehicles to be bought.”

In October 2018, the Department for Transport (DfT) announced the maximum grant for pure electric ‘Category 1’ cars would be slashed from £4,500 to £3,500.

The DfT also announced that ‘Category 2 and 3’ cars, which include plug-in hybrid models, would be removed from the grant system completely.

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