Jan.22
2017

Motor industry blames government as diesel slump hits car sales again

New car registrations have plunged again after a further collapse in the sale of diesel vehicles that is being widely blamed on the government.

Sales are down more than 11 per cent in November, a decline for the eighth month running. The industry has described the crash as a “major concern”.

Last year a record 2.7 million new cars were sold in Britain. This year that figure is on course to fall by more than 5 per cent, a decline of more than 11,000 cars a month and one likely to take it below 2015 levels of 2.6 million.

In November, registrations of new cars fell 11.2 per cent to 163,541. Sales to fleet owners of more than 25 company cars or cars for rent fell by 14.4 per cent. Fleet sales traditionally make up more than half of new car sales. Sales to private owners, which usually make up a little under half of all sales, were down 5.1 per cent. Cars sold to smaller businesses, which account for less than 5 per cent, collapsed by a third.

The cause is a 30.6 per cent slide in the sale of new diesel cars. The industry was sharply critical yesterday of the latest tax raid on the sale of new diesel cars in the chancellor’s budget, even though new diesel engines are regarded as some of the cleanest, greenest vehicles coming on to the market.

Sales of new cars are often seen as a sign of consumer confidence because they are most households’ second largest financial commitment after their home, even if, as with mortgages, most cars are sold on finance, typically on three-year deals. The average price of a new car in Britain is £15,000.

Diesel cars traditionally have made up about half of all sales. They are favoured by high-mileage drivers because of their relative fuel efficiency compared with petrol cars, meaning that they are cheaper to run.

The latest slump has frustrated retailers and manufacturers because of what Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, called the “ongoing anti-diesel messages from government”.

The decision by Philip Hammond to increase tax on new diesels by £500 from April has further irritated the industry. “Diesel remains the right choice for many drivers, not least because of its fuel economy and lower CO2 emissions,” Mr Hawes said.

“The decision to tax the latest low-emission diesels is a step backwards and will only discourage drivers from trading in older, more polluting cars. Given that fleet renewal is the fastest way to improve air quality, penalising the latest, cleanest diesels is counterproductive and will have detrimental environmental and economic consequences.”

He said that falling business and consumer confidence were also worrying: “An eighth month of decline in the new car market is a major concern.”

Car dealers continued to be perplexed by what they called the government’s “demonisation of diesel”.

Sue Robinson, head of the National Franchised Dealers Association, said: “The recently announced tax increase on all new diesel cars affects the cleanest Euro 6 [the new emissions standard] which in many cases still represents the most efficient and affordable vehicle.

“By failing to increase vehicle excise duty on older diesel cars, government is sending a confusing message to consumers that they should not buy a new diesel but rather stay in their old cars or buy a second-hand, dirtier diesel car.”

Sales of hybrid electrics, plug-in hybrids and pure electrics rose 33 per cent in November, accounting for 5.4 per cent of the market.

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