More gloom for UK car makers as registrations fall again in May

SMMT says UK new car registrations fall -4.6% in May with 183,724 units registered. Demand for petrol and AFV vehicles increases, but diesel registrations fall -18.3%

The UK new car market declined by -4.6% in May with 183,724 units registered, according to figures released today by the Society of Motor Manufacturers and Traders (SMMT).

The fall reflects continued uncertainty over diesel and clean air zones as well as the removal of incentives for plug-in hybrid vehicles. Meanwhile, the underlying economic and political instability continues to affect consumer and business confidence.

Declines were recorded across all sales types in the month, with registrations by private consumers, fleets and business buyers declining by -5.0%, -3.0% and -29.0% respectively. Most vehicle segments experienced a fall in demand, however, executive and dual purpose vehicles bucked the trend, with registrations growing 9.1% and 16.0%. While demand for superminis and small family cars fell, these vehicles remain the most popular taking a combined 56.3% of the market.

Modest growth in registrations of petrol (1.0%) and alternatively fuelled vehicles (11.7%) was not enough to offset the significant decline in demand for diesels, which fell for the 26th consecutive month. Ongoing anti-diesel sentiment and the forthcoming introduction of low emission zones continues to affect buyer confidence. However, thanks to significant industry investment in new technology, the latest diesels are safer and cleaner than ever before and will not face charges or restrictions anywhere in the UK.

Meanwhile, petrol electric hybrids experienced increased demand, up 34.6% to 7,785 units. Battery electric cars also recorded a significant rise of 81.1% yet this segment still only represents 0.6% of the overall market. However, following recent trends, plug-in hybrids experienced another substantial decline, down -40.6% in May and -25.1% year-to-date. This compares with a 36.2% increase in the first five months of 2018 and is further evidence of the removal of the purchase incentive for PHEVs.

“Confusing policy messages and changes to incentives continue to affect consumer and business confidence, causing drivers to keep hold of their older, more polluting vehicles for longer,” said Mike Hawes, CEO, SMMT.

“New cars are safer, cleaner and more advanced than ever and, with sophisticated safety, efficiency and comfort features as well as a host of attractive deals on offer, there has never been a better time to invest in a new car,”

Commenting on the figures Jonathan Moss, partner and head of transport at global law firm said that manufacturers need to do more to incentivise Alternative Fuel Vehicles (AFV).

“.These figures certainly put additional pressure on the government, as the slow decline in petrol vehicle registration is insufficient to meet ambitious CO2 emission targets,” he said.

On the other hand, AFVs continue to see a solid period of growth. Nevertheless, this growth is not sufficient to tip overall registration figures into overall growth. Policy makers need to devise much more aggressive incentives strategies, in order to make AFV vehicles significantly more affordable and appealing to customers who are impeded by the high price tags for the electric cars and electric hybrid vehicles.”

“From an industry perspective, the current market also puts a significant strain on manufacturers, who are dealing with increasing pressure on carbon emission standards in the face of significant uncertainty and declining registrations numbers.”

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