Consumer uncertainty, new testing rules and decline of diesel lead to 20% fall, says SMMT

This article is more than 1 year old

This article is more than 1 year old

UK sales of new cars plunged by a fifth in September as new emissions tests caused delivery backlogs, while waning appetite for diesel cars and weaker consumer confidence weighed on demand.

A total of 338,834 new cars were sold last month, according to figures from the Society of Motor Manufacturers and Traders (SMMT), down 20.5% compared with the same month last year.

September is traditionally a bumper month for sales as consumers rush to buy cars with new number plates, but last month was the worst September since 2008, when the UK was in recession and new car sales fell by 21.2%.

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However, the SMMT said new and more rigorous emissions testing rules created supply problems and a backlog of deliveries as car manufacturers suffered delays in getting their cars approved.

From 1 September, all cars sold in the EU are subject to the Worldwide Harmonised Light Vehicle Test Procedure (WLTP), measuring all regulated emissions, as well as CO 2 and fuel economy.

“With the industry given barely a year to re-approve the entire European model line-up, it’s no surprise that we’ve seen bottlenecks and a squeeze on supply,” said Mike Hawes, the chief executive of the SMMT.

“These are exceptional circumstances with similar declines seen in other major European markets. The good news is that, as backlogs ease, consumers and businesses can look forward to a raft of exciting hi-tech cars and a market keen to recover lost momentum.”

The drop followed a particularly strong August, when sales of new cars jumped 23% as some manufacturers offered special promotions to push customers to bring forward purchases.

Volkswagen appeared to be the hardest hit manufacturer, with new car sales more than halving to 16,283 from 36,332 in September last year.

While the Volkswagen Golf and Volkswagen Polo make it into the top 10 bestsellers in 2018 so far, neither featured in the top 10 for September. The top three bestsellers last month were the Ford Fiesta, Vauxhall Corsa and Mercedes-Benz A-Class.

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The September sales fall was widespread across almost every vehicle segment, with people carriers and specialist sports cars hit hardest, down 54.8% and 50.9% respectively.

A weak performance last month pushed sales in the first nine months down 7.5% compared with the same period last year, to a total of 1.9m cars.

Sales are being hit by Brexit uncertainty, as some consumers and businesses are reluctant to commit to major spending decisions until the outcome of talks with the EU is clearer.

The car industry has argued that the government must put the interests of the automotive sector at the heart of Brexit negotiations, or risk the loss of thousands of jobs and hundreds of millions of pounds of investment.

The Japanese firm Nissan became the latest car manufacturer to warn that a no-deal Brexit would have “serious implications” for British industry and for the company, which employs almost 8,000 people in the UK, mostly at its Sunderland factory.

BMW, Jaguar Land Rover, Toyota, and the PSA Group, which owns Vauxhall, have all warned they are likely to reduce their operations in the UK in the event of a hard Brexit.

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Demand for diesel cars continued to plummet in September, with sales down 42% at 98,191. Petrol car sales fell 6.7% to 217,136, while sales of alternatively fuelled vehicles rose 3.9% to 23,507.

“A collective ‘ouch’ will be heard though the industry this morning as getting September right is vitally important for the new car market,” said Ian Gilmartin, the head of retail and wholesale at Barclays Corporate Banking. “That said, September was a far from normal month for the sector with new testing requirements impacting supply and blurring the picture.

“With car manufacturers focused on ensuring they are in line with new regulations and given the reluctance of buyers to commit to big purchases, in part due to Brexit uncertainty, it does look likely that as year-end approaches we’ll be down on 2017 for full-year sales.”