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New car registrations forecast to decline further in 2018 and 2019

New car registrations forecast to decline further in 2018 and 2019

New car registrations are expected to fall in 2018 and 2019, according to the Society of Motor Manufacturers and Traders (SMMT) following a 5.7% reduction in sales last year.  

Declining business and consumer confidence was largely blamed by the SMMT for the fall in registrations last year to 2,540,617 (2016: 2,692,786), although the market was still the third biggest in a decade.  

December represented the ninth consecutive month of decline, as registrations for the final month of the year dropped 14.4% to 152,473 (December 2016: 178,022).  

The SMMT anticipates that new car registrations will fall by around a further 5.4% in 2018 and then drop to below 2.4 million units next year - some 300,000 or 11% below 2016’s record volume.  

Private, fleet and business registrations were all down in 2017, with demand from private motorists declining 6.8% at 1,123,860 (2016: 1,206,250), while fleets saw a fall of 4.5% to 1,319,193 (2016: 1,380,750) and business registrations down 7.8% to 97,564 (2016: 105,786).

Last month new car registrations declined across all three sectors: Fleet volume was down 11.7% to 90,217 (December 2016: 102,125); business sector registrations were down 35.3% at 5,339 (December 2016: 8,257) and private volume was down 15.9% to 56,917 (December 2016: 67,640).  
The SMMT also claimed that “confusing anti-diesel messages” from the government had caused many to hesitate before buying a new low emission diesel car and resulted in a 17.1% slump in sales in 2017  

Meanwhile, registrations of alternatively fuelled vehicles accelerated 34.8% last year. The SMMT highlighted that a record number of hybrid, plug-in hybrid, battery electric and hydrogen fuel cell cars were registered - 119,821 models in total. However, while the result was the sector’s highest-ever annual market share - 4.7% - it accounts for a tiny fraction of the overall new car market. For example, alternatively fuelled vehicle registrations in Norway last year accounted for more than 50% of total new car registrations.

Poppy Welch, head of Go Ultra Low, the collaborative motor manufacturers, SMMT and industry campaign group, said: “2017 was a stellar year for electric vehicle registrations with strong growth of 27%, demonstrating the massive consumer appetite for 100% electric and plug-in hybrid cars.
  “There are already more than 130,000 electric vehicles on UK roads, a figure that could pass 190,000 this year as new models come to market and consumers reap the cost saving benefits of electric driving.”  

SMMT chief executive Mike Hawes said: “The decline in the new car market is concerning but it’s important to remember demand remains at historically high levels. More than 2.5 million people drove away in a new car last year, benefitting from the latest, safest, cleanest and most fuel efficient technology.  

“Falling business and consumer confidence is undoubtedly taking a toll, however, and confusing anti-diesel messages have caused many to hesitate before buying a new low emission diesel car. Keeping older vehicles on the road will not only mean higher running costs but will hold back progress towards our environmental goals. Consumers should be encouraged to buy the right car for their lifestyle and driving needs irrespective of fuel type - whether that be petrol, electric, hybrid or diesel as it could save them money.  

“2017 has undoubtedly been a very volatile year and the lacklustre economic growth means that we expect a further weakening in the market for 2018.”  

Ashley Barnett, head of consultancy at Lex Autolease, the UK’s largest vehicle leasing company, said: “It’s not surprising to see a continued fall in registrations, particularly in light of the publicity around emissions, introduction of Clean Air Zones and changes to government policy around the future taxation on company cars. Despite this, we experienced strong growth within the SME market last year.  

“We expect to see a decline in overall registrations in 2018 as consumers look for clarity around future economic plans and environmental strategy. Despite the rise in average CO2 per new car last year, we predict adoption levels of ultra-low emission vehicles (ULEVs) will rise in the year ahead as consumers review fuel type in their vehicle choice.”  

Matt Dyer, managing director of LeasePlan UK, said: “It would be a mistake for the industry to fixate on the dip, because 2017 sales were still amongst the highest on record. Having said that, ownership trends are changing due to the gig economy and a host of other factors, most significantly the fact that peoples’ attitudes towards ownership are shifting.

“Personal leasing is growing strongly, with the British Vehicle Rental and Leasing Association reporting that personal contract hire has risen 36% year-on-year. There’s a huge move toward drivers wanting a more flexible approach, which ownership does not provide.  

“The motor industry is vital to the UK economy, and as the switch to electric vehicles gathers pace, I fully expect more people to embrace the flexibility of leasing and start to move away from the more traditional approach of ownership.”