UK car market in decline as diesel sales tumble by 21.7%

The UK car market shrunk by 9.3% to 426,170 units last month, marking the first September in which registrations declined for six years. Sales usually grow in September due to the registration plate change.

Society of Motor Manufacturers & Traders (SMMT) CEO Mike Hawes said: “September is always a barometer of the health of the UK new car market, so this decline will cause considerable concern.

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

Hawes labelled “confusion over air quality plans” as one of the key reasons for a large decline in demand for diesel cars, registrations of which are down by 21.7% compared with September 2016. There was also a 1.2% decrease for petrol models, with 232,810 cars registered.

Commenting on UK car sales falling for the sixth month in a row, Christian Stadler,  Professor of Strategic Management at Warwick Business School, who has researched the car industry, said: "Brexit has caused the slump in car sales in the UK. The drop over the last six months has been interpreted as a reaction to the uncertainty about diesel cars after the Volkswagen scandal, but the data does not support this.

"Sales of diesel cars are further down than other cars, but that does not explain the overall drop in car sales, especially as the scrappage scheme for diesels used by some manufacturers should have helped sales.

"Plus, most importantly, when you compare the UK with data in other Western European countries their car sales have increased and considerably so. The only difference in the UK is Brexit and the uncertainty that it is causing, which is also affecting the economy as that is not looking so good compared to those Western European countries.

"Consumers do not know where Brexit is going to go and buying a car is a big investment, so they are putting it off to a later date.

"Also, Brexit will raise costs for manufacturers as they deal with the uncertainty plus the interlinkage between manufacturers and suppliers across Europe makes cars more expensive in the UK because of the fall in sterling.

"This also means there are not so many cheap finance deals around, with zero finance deals very hard to find."

Used car market steady in second quarter of 2017
Contrastingly, registrations of alternatively fuelled vehicles (AFVs) continued to soar, with a 41% boost in output over last year’s month. Despite the boost, however, AFVs still accounted for just 22,628 cars, or 5.3% of the market, in September.

In the face of concerns over future legislation, Hawes said: “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 that fleet renewal is the best way to address environmental issues in our towns and cities.”

Of the manufacturers, Ford remained the biggest producer of cars, supplying 39,696, more than two thirds of which were Fiesta or Focus models. Volkswagen was second, with 36,332 cars produced, of which 12,800 were Golfs.

The most registered model in the UK in September was the Nissan Qashqai, with 13,499 units, bringing its year-to-date total to 53,197.

But longstanding leader the Fiesta still comfortably leads the 2017 table, with 75,814 units, beating its stablemate, the Focus, which has recorded 57,256 units. The Golf remains third with 57,018 units.

A Ford spokesman told Autocar UK that the Fiesta's dip in September was attributed to the launch of the all-new model, of which "only two out of six trim levels are currently on sale". Ford therefore expects sales to increase when more variants are launched in the coming months.

A Nissan spokesman told Autocar UK that the Qashqai's success was a reflection of the SUV segment, which has remained resilient throughout 2017, as much as it was a signal for the model's strong demand.