Buyers seize chance to buy cars before new tax rates come into force, but analysts warn demand is likely to slow

New car sales in the UK hit an all-time high last month, with more than half a million vehicles registered, including a record number of diesel models.

A total of 562,337 new cars took to the roads in March as sales of new cars rose 8.4% from a year earlier. It was the biggest month since the Society of Motor Manufacturers & Traders started collecting data in 1976.

This was more than double the number in the first two months of the year combined, driving registrations for the first three months of the year up 6.2% to 820,016 – a record quarter.

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March is traditionally a popular month for new cars due to the introduction of new registrations. However, last month buyers also rushed to buy cars before new vehicle excise duty rates come into force. From 1 April all new cars, apart from those with zero emissions, have to pay an annual flat rate charge.

A total of 244,263 diesel cars were sold in March, a record, but there was also some evidence that the controversy surrounding emissions and the damage these vehicles are causing to the environment is starting to hit demand. Diesel was the slowest-growing segment of the new car market, with sales up 1.6% year-on-year compared to 13.2% for petrol and 31% for alternatively-fuelled cars, such as electric vehicles. This meant that diesel’s share of the new car market fell from 46.4% to 43.4%, while petrol rose from 50.3% to 52.5%. In 2010 diesel cars became more popular than petrol for the first time, but that trend has now reversed.

Sales of diesel cars have hit record levels despite governments around the world exploring ways to get them off the road. Sadiq Khan, the mayor of London, plans to increase the amount that diesel cars pay to enter central London, while earlier this week Sir David King, the chief scientific adviser under both Tony Blair and Gordon Brown, admitted the government had been“wrong” to encourage people to buy diesel vehicles in the past.

Industry experts said on Wednesday that car makers should be forced to recall and upgrade cars that emit higher levels of toxic pollution on the road than they did in official tests. The German and French governments have already demanded that manufacturers including Volkswagen, Opel, Audi, Mercedes and Renault fix more than a million diesel vehicles.

Greg Archer, director of clean vehicles at NGO Transport & Environment and a former UK government air pollution adviser, said: “The polluter should be paying, not the consumer and not the taxpayer. But the UK is doing nothing. If the car industry was required to recall those vehicles and upgrade the after-treatment system that would make a sizeable difference to the air pollution problems in our cities.”

“We wouldn’t need to pay for a scrappage scheme. It is time for the [manufacturers] who caused the problem to pay for the problem.”

This solution is also backed by ClientEarth, the environmental law firm that has twice defeated ministers at the high court over the government’s illegally poor air pollution plans.

James Thornton, chief executive of ClientEarth, said: “The prime minister must get on the side of ordinary car drivers and stand up to the car industry by committing to a programme of mandatory vehicle recall, compensation, random on-road testing and a clean-car label based on real-world emissions.”

Analysts warned that the record-breaking performance for the UK car market in March could be a “last hurrah”. Consumers and businesses are expected to pull back spending as job growth weakens, the economy slows and higher inflation caused by the weak pound erodes the purchasing power of households.

Facebook Twitter Pinterest Car registrations. Photograph: SMMT

Howard Archer, the chief UK and European economist at IHS Markit, said: “There was clearly a considerable lift to sales coming from both consumers and businesses bringing forward car purchases before changes to vehicle excise duty were introduced in April.

“It also looks odds-on that the squeeze on consumers’ purchasing power will deepen appreciably further while businesses will face increasing challenging and uncertain conditions which may well cause them to be more circumspect in replacing their car fleets.

“The suspicion has to be that the car sector will face an increasingly challenging year going forward.”

Demand from fleets and businesses was particularly strong, with registrations up 12.6% and 11.9% respectively in March. Sales to private buyers – consumers – rose 4.4%.