Figures confirm third successive annual fall in sales

LATEST figures from the SMMT have confirmed that the new car market declined last year, down 2.4% to 2,311,140 units.

This was the third consecutive year of decline as the market reacted to weak business and consumer confidence, general political and economic instability and confusion over clean air zones.

The annual decline was driven primarily by falling private demand, with registrations from consumers down 3.2%, while the small volume business market also fell 34.4%. Fleet registrations, meanwhile, remained broadly stable, up 0.8%.

Demand fell across nearly all vehicle segments, with only the dual purpose and specialist sports categories experiencing growth, up 12% and 19.2% respectively.

Despite registrations of superminis and lower medium cars falling (by 6% and 4% respectively), these smaller vehicles remain the most popular – with a combined 57.1% market share.

There was modest growth in demand for petrol cars butthis was not enough to offset the significant 21.8% decline in diesel registrations.

December marked the 33^rd month of diesel decline, as continued anti-diesel rhetoric and confusion over clean air zones hit demand. This has resulted in drivers keeping their older, more polluting vehicles on the road for longer, holding back progress towards environmental goals.

Bucking the overall trend, combined alternatively fuelled vehicle (AFV) registrations surged in 2019 to take a record 7.4% market share. Hybrid electric vehicles (HEVs) continued to dominate this sector, with registrations increasing 17.1% to 97,850 units.

Battery electric vehicle (BEV) registrations experienced the biggest percentage growth, rising 144.0% to 37,850 units and overtaking plug-in hybrids for the first time.

BEV demand at 1.6% market remains tiny and underlines the progress needed to reach the 50-70% share the government envisages in the next 10 years.

This ambition has not been helped by the significant decline of zero emission-capable plug-in hybrids, down 17.8% – further evidence of the consequences of prematurely removing upfront purchase incentives before the market is ready.

The SMMT figures also reveal that the UK new car fleet average CO₂ rose for a third successive year, by 2.7% to 127.9g/km.

Massive investment by manufacturers into advanced powertrains, lightweight materials and aerodynamics means new cars are ever more efficient, with new cars emitting, on average, some 29.3% less CO₂ than models produced in 2000.

However, this could not offset the overall rise which was due primarily to the effect of the more stringent WLTP test of new models, which generally ascribes a higher CO₂ value than the older NEDC test to the same model, as well as some segment shifts and the decline in diesel.

December ended the year on a positive, however, with the market up 3.4%. Fuel type demand mirrored that seen throughout the year, with diesel declining 19% and petrol rising 2.6%.

Battery electric vehicles saw another huge increase in the last month of the year, up 220.7%, while PHEV registrations grew for only the fourth month this year, up 21.8%.

Mike Hawes, SMMT Chief Executive, said, “A third year of decline for the UK new car market is a significant concern for industry and the wider economy. Political and economic uncertainty, and confusing messages on clean air zones have taken their toll on buyer confidence, with demand for new cars at a six-year low.

“A stalling market will hinder industry’s ability to meet stringent new CO₂ targets and, importantly, undermine wider environmental goals.

“We urgently need more supportive policies: investment in infrastructure; broader measures to encourage uptake of the latest, low and zero emission cars; and long term purchase incentives to put the UK at the forefront of this technological shift.

“Industry is playing its part with a raft of exciting new models in 2020 and compelling offers but consumers will only respond if economic confidence is strong and the technology affordable.”

Jon Lawes, Managing Director, Hitachi Capital Vehicle Solutions said the decline in overall car registrations, which reached a six-year low makes for concerning reading.

“However, the strong growth in electric vehicle registrations throughout 2019 will provide the industry with cautious optimism for the year ahead.

“The record market share for electric vehicle registrations can largely be attributed to changing consumer patterns and increasing levels of confidence in the range of options provided by electric vehicle manufacturers. This is supported by our recent research which found that 62% of consumers support the transition towards electric vehicles.

Jonathan Moss, head of transport at DWF, said: “Clarity, consistency, confidence and economic stability are required to turn around the fortunes of the UK new car market which has continued its downward trend, reacting to a series of adverse factors including geopolitical pressures, weak business and consumer confidence and confusion over rules relating to clean air zones.

“New CO2 emission standards are being introduced in 2021 and consumers are holding off from making purchases, unclear about which cars to buy. Electric vehicles are too expensive.

“Manufacturers need to deliver electric vehicles at affordable prices for the mass market. With Brexit on the horizon, there is continued uncertainty within British car manufacturers about what tariffs will be imposed on car components which need to be imported from the EU.

“The changing face of car ownership and the increasing popularity of ride hailing is exacerbating this downward spiral meaning that car manufacturers in the UK will be feeling the heat for some time.”