The UK new car market has declined for a third consecutive month with 243,454 new units registered in June, said SMMT.
Registrations fell at a slower pace than in the previous two months, by -4.8%, as demand continued to stabilise following a record first quarter and the subsequent market turbulence caused by the recent changes to Vehicle Excise Duty.
The market is now more in line with 2017 forecasts but in the details the diesel market has shrunk by nearly 15% while hybrid and electric sales soared 29%.
Demand in the month was down across private, fleet and business registrations, recording falls of -7.8%, -2.4% and -8.3% respectively.
Meanwhile, the AFV sector enjoyed notable growth, with demand rising 29.0% to 10,721 units to maintain a record 4.4% market share for a second month. Petrol registrations rose by 2.5% and diesel fell -14.7%.
|In Wales, the market shrunk nearly three times as much as nationally by 10.9% to 7,152 new cars in June.
It was the steepest fall by any UK region and the fight for sales among dealers was incredibly close, particularly in the last five places of the top ten, where the Fiesta dominated as usual.
Compact cars, typically powered by smaller petrol engines, proved most popular for all buyers, with superminis and small family cars accounting for almost 60% of the market. Small family cars and SUVs were the only two segments to register growth in June, up 6.0% and 11.3% respectively.
Year-to-date, overall performance remains strong, falling slightly by -1.3% to 1,401,811 units and putting the market on track to meet 2017 forecasts.
Fleet and business buyers drove demand across the first six months with registrations up 1.5% and 2.7% respectively in contrast to a -4.8% drop in private purchases, although almost 650,000 consumers have chosen a new car this year.
|Wales top ten|
For the first time since February 2011, the VW Golf was the best seller in June, knocking the usual best selling Ford Fiesta in second place.
|The sales come amid warnings over PCPs and mounting debt and the prospect of tighter regulation regarding car and vehicle finance, which is concerning the credit industry. Graham Hill, car finance expert at the National Association of Commercial Finance Brokers, said, “New car registrations have continued to fall, albeit at a slower pace, for a third consecutive month as VED tax changes and dwindling consumer confidence start to bite.
“It was always forecast that March’s stampede to beat the VED deadline would in turn mean less registrations in consequent months, so this is no great surprise.
“Set against the wider backdrop, the new car market is still in rude health – after all, the first half of the year was the second biggest on record.
“A large proportion of this success has to be attributed to the uptick in car finance, which accounted for around 86% of new car sales last year.
|June top ten|
BMW 3 Series
MB C Class
Shaun Armstrong, managing director, car finance provider Creditplus.co.uk added, “The new car market has had a bumpy ride to say the least since March when figures hit record levels.
“The vehicle excise duty hike in April dampened demand and sales weren’t helped by diesel becoming a dirty word.
“Throw into a mix an unexpected General Election result and the political and economic turbulence stirred up by Brexit, and it’s hardly surprising sales have dipped.
“It’s been a truly awful period for diesel sales. In March, diesel new registrations were close to 250,000, and above petrol new registrations.
“In June, new regs were just above 100,000 and almost 15% lower than petrol. That’s a serious, and possibly fatal fall from grace.”
The new car market needs a serious injection of confidence from somewhere, he went on.
“Manufacturers looking for stronger sales in the second half of the year will turn to providing larger discounts and bonuses to make car finance deals look more attractive.
“They have the ability to do so as new car prices in the UK are the highest in Europe, providing plenty of wriggle room.
“As the FCA continues to look into the lack of transparency around the selling of certain car finance deals, the sabre-rattling around the actual finance products themselves needs to soften.
“It already looks like the adverse publicity surrounding Personal Contract Purchases in particular has knocked consumer confidence in the product. Carry on like this and we risk driving away consumers and talking the market into an early grave.”