October continued the recent trend of falling car sales in the UK, with a seventh consecutive month of reduced registrations year on year. The decline in sales started in April and has continued ever since. It seems people lack the confidence to spend money on a new vehicle right now.

Sales of cars in general fell by 12.2%, with diesel sales plummeting by 30%, despite a range of generous scrappage scheme offers. Year to date sales are currently down 4.6%, with 2, 224,603 new cars being registered in the first ten months of 2017. It is thought that by the end of December there will have been a 4.7% drop in total.

Which cars are people buying?

In contrast to this, sales of electric cars have risen by 36.9%, with 8,244 new models being registered within the month. Despite MoneySuperMarket’s finding that some 49% of the British public have never even considered buying a hybrid or electric vehicle, it seems that alternative fuels are catching on, albeit slowly.

Although car sales in general declined, there was a 3% rise in the sales of petrol cars in October. Consumers are worried about buying diesel cars in particular and opting for petrol or electric vehicles instead.

The October numbers were also affected by a 13% drop in fleet purchases, which was more than the 10% decline seen in the consumer figures for the month. Just as individual car buyers are bracing themselves for the impact of Brexit, so are the UK’s businesses.

UK car sales

(Credit – Jaggery)

The death of diesel

The figures will no doubt please people who have been fighting against diesel cars due to the high level of dangerous toxins that they produce. Many consumers have been left confused by the recent emissions debates surrounding the different types of vehicles on offer to them and it seems that even the various scrappage schemes aren’t enough to tempt buyers back to diesel models.

The Society of Motor Manufacturers & Traders (SMMT) Chief Executive Mike Hawes has said that the government needs to make it clear that consumers buying new, lower emission diesel cars won’t face additional taxes or charges like those who drive older diesels. He goes on to say that this issue should be addressed in the next budget. He calls for fleet renewal as one of the best ways to help to combat the air quality issue that is currently spreading across the UK.

Other factors

Another reason for the reduction in car sales is rising inflation, which has hit many families hard over the past few months in particular. Falling wages (in relative terms) are also playing a part, as is the recent interest rate rise. It seems that people just don’t trust the economy enough to make a big purchase. The Brexit vote and subsequent chaos around the negotiations with the EU are clearly having a negative impact on the motor industry.

As people put off buying cars, there’s also the fact that many are finding that they don’t actually need to own a car. They are opting to use public transport, share with a friend or family member, or join a car share for their commute to and from work. Freedom from the expense of taxing, insuring, servicing and maintaining a vehicle can certainly make a big difference to family finances.

Production figures falling

This is a heavy blow to UK car manufacturers. In response to the lack of demand from customers, manufacturers have seen production figures fall over the last five months. With no end in sight for plummeting sales figures, this only looks like it will get worse, as manufacturers rely heavily on Britain’s single market and customs union memberships, which are both at risk during the Brexit negotiations.

The devastating effect on Vauxhall workers has already been felt. The firm has announced that it will need to cut 400 jobs from its site near Liverpool. The redundancies have been put down to rising costs due to the fall of the value of the pound, on top of a change in customer car preference.

Nor is it only consumers who are holding back on buying cars and impacting production levels. Sales to businesses also fell in October, resulting in a 26.8% drop. Businesses and individuals are both cutting back on spending during these times of financial uncertainty.

These figures may make for depressing reading, but perhaps they also offer a chance to embrace people’s interest in alternative fuel vehicles. And perhaps motorists will resume buying diesels once they can be confident that doing so won’t turn out to be a mistake in years to come.

When do you think we will see a turnaround in the fortunes of the UK car industry? Will it come before the UK leaves the EU or after? Leave a comment to share your thoughts. 

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