New car market declines in 2017, but still the third best year in a decade for new car registrations

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Author: | Updated: 05 Jan 2018 11:27

The UK’s new car market declined 5.7% in 2017, which is the first annual decline in six years.

December also marked the ninth consecutive month of falling registrations with the monthly –14.4% decline resulting in a final annual tally of 2,540,617 newly registered vehicles, according to end-of-year figures from the Society for Motor Manufacturers and Traders (SMMT).

All is not bleak though, 2017 still proved to be the third most successful year in a decade for the UK car market, after the record figures record in 2016.

UK new car market declined in 2017, for the first time in six years.

Annual new car registrations, 2000 - 2017

Private and fleet registrations were down 6.8% and 4.5% respectively, but the biggest loss were business registrations, with the sector ending 2017 down by 7.8%.

Superminis, small family cars were the most popular cars once again, but the only body segment to grow was – rather unsurprisingly – SUVs.

Hybrid and petrol numbers rise, but fail to offset diesel downer

Interestingly, both petrol and alternatively fuelled vehicles (AFVs) ended the year on a high, with yearly registrations up 2.7% and 34.8% respectively.

AFV and petrol registrations grow, but fail to offset diesel decline.

UK consumers are driving more plug in cars than anywhere else in Europe and demand grew by a quarter in 2017 – making Britain a key market for these vehicles.

The growing appetite for AFVs could not offset a drastic decline in diesel registrations however, which fell –17% in the last 12 months.

What has caused the drop?

Diesel disinformation has been partly blamed for 2017's falling registration levels.

Although the government’s Autumn Statement went some way to clarifying its position on diesel, the SMMT believes “anti-diesel rhetoric and the potential for tax hikes causing buyers to hesitate” is the primary cause for the drop.

Mike Hawes, SMMT chief executive, commented: “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.”

How did manufacturers do?

While some manufacturers have seen sales dip and market share fall back, for others it has been an encouraging year on the registration front.

Seat registrations increased by 18%, while the march of Mercedes continued after it benefitted from a 6.6% increase in registrations to gain a record market share of over 7%. It is the eighth consecutive year of growing sales for Mercedes-Benz, placing the brand fourth in the UK market and first among premium manufacturers.

Other success stories include Kia, which also set a new sales record, Toyota, Alfa Romeo, Jaguar and Infiniti, all of which saw their market share increase.

Seat witnessed impressive growth in 2017 – its Leon was one of the most enquired about models on ContractHireAndLeasing.

The final score…

As the the models themselves, unsurprisingly the Ford Fiesta remains the number one hitter, followed by the Golf and Focus. While small family Fords still have a place in the top ten, it’s interesting to see the likes of larger mainstream models like the Mondeo have made way for the likes of the more premium Mercedes C-Class.

Most popular cars UK 2017

What will 2018 bring?

Despite the overall decline, new car registrations remain high, with the market still the second biggest in the EU, behind Germany. It is also one of the most diverse, with consumers able to choose from some 350 different models available in fuel types and body styles, and on attractive finance terms.

Total registrations 2009 – 2017

Mike Hawes said: “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. The upside for consumers, however, is some very, very competitive deals.”

Another issue to consider in 2018 is rising emissions – the SMMT confirmed that average new car CO2 figures in 2017 rose for the first time in two decades, up 0.8% (121.04g/km) compared to 2016. This is partly due to the fall in diesel registrations, that actually produce less CO2 than petrol equivalents.

What will 2018 bring for those that want a new car?

Hawes commented: “It’s disappointing, therefore, to see these advances undermined by the backlash against cleaner, low emission diesels, with the recent drop in sales the prime cause of this increase in CO2 emissions.”

Ashley Barnett, head of consultancy at Lex Autolease said: “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.”

Brexit concerns and upcoming increases to diesel VED and company car taxes from April 2018 mean the SMMT expects further falls in 2018 by as much as 5 – 7%, according to the latest forecasts.

Want more industry news? Read more from the SMMT here

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