The UK new car market declined 7.3% in January, according to figures from the Society of Motor Manufacturers and Traders.
Some 149,279 vehicles left showrooms as continued confusion surrounding diesel and clean air zones and ongoing weak consumer and business confidence continue to affect demand.
Continuing low consumer demand was a key driver behind the decline, with registrations by private buyers down -13.9%, while fleet registrations also fell but by a less significant -2.2%. Registrations of new diesel cars fell for the 34th month, by 36.0% to record the weakest performance since 2000 and just 19.8% share of the market, while petrol demand also declined, by -9.5%.
It contrasted with a growth in light vans sold.
The UK new light commercial vehicle (LCV) market enjoyed growth in the first month of the year, according to the SMMT. Registrations rose +5.9% in January after three months of decline towards the end of 2019, caused by pent-up demand due to regulatory changes, as well as operators taking advantage of some compelling deals on the latest models.
There was consistently strong reaction to the sales drop.
“Today’s new car sales figures showing a decline of -7.3% in January are disappointing, however, this follows a particularly strong December when consumers could benefit from a wide range of manufacturer offers”, said Sue Robinson, Director of the National Franchised Dealers Association, which represents franchised car and commercial vehicle retailers in the UK commenting on the latest SMMT’s new passenger car registration figures.
The UK New car market declined by -7.3% in January 2020 with 149,279 units registered. Sales of petrol cars declined -9.5%, diesel -36.0, whilst battery electric vehicles continued to grow, up 203.9%. Plug-in Hybrid Electric Vehicles rose by 111.1% in January to 4,788 units. Private demand decreased by -13.9% and fleet -2.2%.
Robinson added, “Positively, sales of pure electric vehicles rose significantly and the upward trend is likely to continue with plenty of new models coming to the market. However, the Government’s clean air policies must be consistent, and motorists need to receive further support, especially if the UK is to meet the 2035 deadline for the sales of new petrol, diesel and hybrids. This includes maintaining the plug-in car grant.
“When planning future policies, it is crucial that the Government recognises the investments that will be required by franchised retailers and those that have already been made to meet the fast-changing consumer demand. Additionally, we urge the Government to reconsider its plans to ban the sales of new plug-in hybrids by 2035 considering the growth that this segment is experiencing.
“We will continue to work closely with our franchised dealer members and industry partners to inform consumers and help them select their ideal car while supporting the transition to EVs”.
James Fairclough, CEO of AA Cars, said,“January’s 7.3% fall in sales suggests it will take the car industry some time to bounce back from a challenging 2019.
“The continued slide in demand for diesels is a big contributor to the overall fall in new car sales, alongside this month’s 9.5% decline in petrol sales.
“The growth in sales of plug-in hybrids – up 111.1% in January – would usually give a clue to where drivers are going to be spending their money this year.
“However, the Government’s announcement yesterday that it intends to ban the selling of new hybrid cars by 2035, alongside new petrol and diesel vehicles, will shift buying patterns in the years ahead.
“Including hybrids in the ban could prove to be counterproductive if it leads some drivers to hold onto petrol and diesel cars for longer.
“One positive is that moving the ban from 2040 to 2035 should ultimately deliver a revolution in demand for electric vehicles. Rolling out more charging infrastructure around the country could nudge more drivers to make the leap to plug-in cars.
“However, financial incentives, such as scrapping VAT on electric vehicles, may be needed to spark drivers to buy EVs in sufficient numbers to send new car sales soaring this year.”
Seán Kemple, Director of Sales at Close Brothers Motor Finance, added,“December’s downturn in sales has trickled into January, showing no sign of a post-election boost. 2019 was damning on diesel, and now petrol is taking the hit too – clearly seen in the steep 10% fall in the combined market share year on year. We expect to see the same slump until new number plates come out in March.
“But there’s no need to pump the brakes just yet. Diversifying fuel type is not deterring buyers as demand for battery electric and plug-in hybrid electric vehicles (PHEVs) have soared. And when it comes to stock, range anxiety is dwindling as consumers are becoming more comfortable with the new models that are being delivered to the showroom floors.
“In the lead up to March’s Budget, all eyes will be on the Government to maintain its support and investment in the electric market. And with the beginning of the end of the Brexit saga, it’s down to dealers to raise the confidence of buyers by offering steady advice and the right stock.”