Brexit Uncertainty and Falling Diesel Sales Lead to Six-Year Low
Despite Britain being the second-largest market for new vehicles, newly released figures from the Society of Motor Manufacturers and Traders has shown that registration of new vehicles fell by 2.4% to 2.3 million.
This figure is the lowest number since 2013, which same 2.26 million vehicles sold. The six-year low can be attributed to the uncertainty of Brexit, as well as increased restrictions places on diesel emissions
The regulations put in place at the start of 2020 stick to the current EU regulations that see car manufacturers fined should emission targets not be met. Consumers are also unsure of how the rules work in relation to diesel vehicles entering city centres.
The new figures can also be attributed to consumers being more cautious on the way they spend, despite unemployment being low.
Despite the sale of new vehicles lowering, the SMMT believes that the trend will continue before improving. It is predicted that sales will plunge a further 1.6%, which equates to around 2.27 million registrations.
This figure could be lower again given the current situation surrounding Brexit, although it is believed that this figure could improve if a tariff-free deal is struck once the UK exits the EU.
As well as a drop in the registration of new vehicles, there has also been a change in the vehicle that people in the UK are purchasing.
Small Cars Are Falling Out of Favour
Despite the drop in numbers, there where two types of vehicles that have sold well. The sale of SUVs is up by 12%, while the purchasing of sports cars has increased by 19%.
This shows that those in the UK are choosing more larger cars that consume more fuel, which has been attributed to the tough WLTP Testing Regime which was introduced in 2017.
WLTP is an abbreviation for Worldwide Harmonised Light Vehicle Test Procedure, and it replaces the NEDC regulations which were discredited after false advertising claims and looks to avoid instances such as the VW emissions scandal.
Whereas the NEDC regulations were based on laboratory testing, the WLTP Testing Regime introduces real-world testing, and are the first fuel economy tests carried out on an open road.
Do Diesel Cars Have a Future?
There is a lot of speculation as to whether cars that run on diesel are still a worthwhile investment, as many consumers won’t invest in a car that they won’t be able to use if various restrictions come into place.
Although the industry points out that diesel vehicles are cleaner than those we’ve seen in the past, there is still a notion that the general public sees such vehicles as ‘dirty,’ which is being spurred on by politicians talking of bans and restrictions.
The industry state that vehicles running on diesel still offer as much as 20% improvement in relation to Co2 emissions, but this isn’t the only concern being faced by the British motor industry.
However, this isn’t the only factor that needs to be considered when looking at the future of diesel vehicles, as the politics of the UK could be enough to stop car manufacturing in its path.
Should there be a no-deal Brexit, then border controls could mean that the decline in car sales in the UK drops further, simply because car manufacturers won’t be able to access the parts needed.
Despite some of the worrying news surrounding the British motor industry, there are still those that remain confident of the future.
Analyst Ian Gilmartin states that despite some of the disappointing new surrounding the sales of vehicles in Britain, sales are still higher than the start of the decade. He also pointed out that both manufacturers and retailers are making positive steps to ensure that vehicles are aligned with the changing landscape.
Demand Could Potentially Outstrip Supply in Relation to Electric and Hybrid Vehicles
Despite the disappointing numbers surrounding the sales of diesel vehicles, the sale of electric and hybrid vehicles has been more positive.
An increase of 20.6% has meant that electric and hybrid motors now have a record market share of 7.4%.
Unfortunately, the demand for such vehicles in the UK has been so great, that those manufacturing the vehicles are unable to keep up with demand, and this can be attributed to a couple of reasons.
Firstly, although the use of electric vehicles is becoming more popular, a sense of confidence is needed, but the confusion of Brexit as a whole means that consumer can be left bewildered.
As well as some consumers being unsure as to whether the switch to electric vehicles is worthwhile, there are other concerns that a no-deal Brexit could mean that the frictionless transactions enjoyed now come to a grinding halt.
This means that although the demand for such vehicles is present, those manufacturing vehicles in the UK will struggle to obtain parts, whereas international manufacturers may prefer to send vehicles to countries where the rules offer more clarity.