New car sales decline 9pc as diesels fall out of favour

The new car market has declined for a sixth consecutive month, with an especially sharp drop in diesel sales, industry figures have shown. 

Just over 426,000 new cars were registered in September, down 9.3pc on the same month last year, according to the Society of Motor Manufacturers and Traders (SMMT).

In the year to date, car registrations have slipped 3.9pc compared to a year ago, with 2.07m registrations so far in 2017.

“September is always a barometer of the health of the UK new car market so this decline will cause considerable concern,” said SMMT chief executive Mike Hawes.  

The organisation claimed economic and political concerns, combined with uncertainty about the Government’s air quality plans, had put consumers off purchases. 

Registration levels, used as a proxy by which to measure new car sales, followed a Government announcement of plans to ban the sale of all conventional diesel and petrol cars by 2040 in a bid to meet European Union limits on harmful nitrogen dioxide pollution.

Whitehall is also considering measures to cut pollution with a tax on new diesel vehicles.

Demand for diesel cars fell steeply, down 21.7pc in September and 13.7pc for the year so far compared to a 1.2pc fall in petrol vehicles. Sales of alternatively fuelled cars jumped 41pc to 22,600, giving them a 5.3pc share of the market.

Diesel cars have fallen out of favour

Significant corrections had to be made to the August new car registration data released by SMMT, which blamed a faulty algorithm for the incorrect numbers. The trade body had to revise its initial figure of a 13.7pc decline to a far more modest 0.7pc drop. 

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the fall on 2016’s level was yet another indication that inflation was hitting household incomes. But he noted that uncertain air quality plans had not hit sales as hard as last year’s tax changes.

“In seasonally adjusted terms… we estimate that registrations were 9.7pc higher in the third quarter than in the second, when sales were hit by April’s increase in vehicle excise duty,” he said. 

Questions over future levies on diesel cars and a cooling economy pulled down sales last month, according to Steve Wishart, head of lending at Callcredit Information Group. But he cautioned against companies loosening their lending practices in order to offset a decline in consumer demand.

“It is important car finance providers and the dealers they support don’t have a knee-jerk reaction to today’s numbers,” Mr Wishart said. “It may be tempting to take a shortcut in the sales process by speeding through or failing to make sufficient affordability checks during more challenging market conditions but this could easily lead to a rise in unsustainable household debt.”

SMMT also claimed environmental plans were “thwarting the ambitions” of the Government and the motor industry to reduce pollution levels by “undermining the rollout of the latest low-emissions models”.

Mr Hawes said that manufacturers’ scrappage schemes, particularly for the fleets of vehicles used by businesses, ought to be encouraged as the best means to address environmental issues.

The Committee on Climate Change has said 60pc of new cars and vans must be electric by 2030 to meet carbon targets cost effectively.

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