Sales of new cars in UK slump in March

Sales of new cars in the UK plunged in March as economic uncertainty weighed on demand and consumers turned their backs on diesel, extending the run of falling sales to 12 months.

A total of 474,069 new cars were driven off the forecourts of car showrooms last month, down 15.7% compared with March 2017.

The drop reflects a broader trend over the past year, as cash-strapped consumers are less willing to commit to big spending decisions since the Brexit vote, which triggered a sharp fall in the pound and pushed up prices.

New car sales have also been hit by a sharp fall in demand for diesel cars, sales of which dropped 37.2% in March, according to the figures from the Society of Motor Manufacturers and Traders (SMMT).

The last time car sales for fell for a longer period was between July 2010 and July 2011, after the government’s scrappage scheme had ended.

“Consumer and business confidence has taken a knock in recent months and a thriving new car market is essential to the overall health of our economy,” said Mike Hawes, chief executive of the trade body. “This means creating the right economic conditions for all types of consumers to have the confidence to buy new vehicles.”

March is a plate-change month, which typically drives a spike in demand, but the SMMT pointed out that it was always going to be tough to beat last March, when new car registrations hit a record high as consumers brought forward purchases to beat a tax rise which came into force in April 2017.

The industry’s weak performance last month meant car sales were down 12.4% in the first quarter overall, compared with the same period last year, with 720,000 driven off UK forecourts.

The most popular car in 2018 so far is the Ford Fiesta, followed by the Volkswagen Golf and the Nissan Qashqai.

Hawes said despite the persistent run of falling call sales over the past year, the market was relatively strong, with last month’s market was the fourth biggest March on record.

While demand for diesel has fallen sharply since the emissions scandal and amid uncertainty about future environmental levies on diesel cars, sales of new petrol cars rose 0.5% in March, and plug-in and hybrid sales were up 5.7%.

“All technologies, regardless of fuel type, have a role to play in helping improve air quality while meeting our climate change targets, so government must do more to encourage consumers to buy new vehicles rather than hang on to their older, more polluting vehicles,” Hawes said.

Ian Gilmartin, head of retail at Barclays corporate banking, said the UK industry still had some reasons to be cheerful. “Car sellers shouldn’t be too disheartened – the industry is still producing very high quality products, with most cars, including diesel models, more environmentally friendly than ever.

“If manufacturers and the motor supply chain can retain their focus on the future, they will be able to help retailers attract drivers back to the showrooms.”

Britain’s car industry was vocal supporter of the remain camp in the run-up to the Brexit vote, and has since urged the government to secure a tariff-free deal with the EU to keep the sector competitive in the UK.

There was some good news for the UK industry on Wednesday, when the French owner of Vauxhall said it would invest about £100m in its Luton plant, despite Brexit uncertainty.

However, PSA, the manufacturer of Peugeot and Citroën, also said a decision on the future of its Vauxhall plant at Ellesmere Port would not be made before 2020, when there would be more clarity on Brexit.