New car market falls 15.7% in March, as diesel decline continues
The UK’s new car market shrank by 15.7% year-on-year last month, making March the twelfth consecutive month of falling car registrations.
To put this into context, March 2017 was a record month for new car numbers ahead of changes to VED rates, and a decline in 2018 had always been expected, although not by this much. Even compared to March 2016, last month was down 9%.
Despite the sizeable fall, March 2018 is still the fourth biggest on record for new car numbers.
Figures from the Society of Motor Manufacturers and Traders (SMMT) revealed 474,069 new cars hit the road last month, compared to 562,337 in 2017.
Overall, demand for petrol and alternatively fuelled vehicles (AFVs) rose 1% and 5.7% respectively in March, but they failed to offset a massive 37.2% fall in diesel, which now accounts for 32.4% of the market.
As March is traditionally a busy month for the industry courtesy of the number plate change, the continuing decline in diesel numbers indicates the industry’s attempts at assuring consumers that there is a future for the fuel are failing.
Industry expert Christopher McGowan commented: “The industry knew that this year was going to be down between 5-8% but if it was to continue at 15% that would be very, very serious indeed.
"March is always a very busy month and so to take a 15% hit when there are hundreds being retailed, that's pretty bad news in itself."
Demand from business, fleet and private buyers all fell in March, down -14.3%, -15.0% and -16.5% respectively.
Ashley Barnett, head of consultancy at Lex Autolease said: “This is the first year-on-year decline we’ve seen in seven years. Political, economic and regulatory factors are playing an important role and consumers and fleets are naturally more hesitant when it comes to big ticket purchases.”
Are things as bleak as they look?
With higher first-year VED rates for diesels now applicable, diesel numbers are likely to continue to drop, but is the news really that bad? Although the UK is expected to be the worst-performing new car market in Europe in 2018, it remains the second largest and demand is still surprisingly high.
Mike Hawes, SMMT chief executive said: “March’s decline is not unexpected given the huge surge in registrations in the same month last year. Despite this, the market itself is relatively high with the underlying factors in terms of consumer choice, finance availability and cost of ownership all highly competitive.
“Consumer and business confidence, however, has taken a knock in recent months and a thriving new car market is essential to the overall health of our economy.”
Looking ahead, the SMMT expects that registrations will continue to fall this year, with the latest forecasts predicting the fall will be between 5% and 7% by the end of 2018.
The most popular cars
There are few surprises when it comes to the UK’s most popular cars so far this year, with the Ford Fiesta, Volkswagen Golf and Nissan Qashqai taking first, second and third place both in March and in the year to date.
Also a feature on both lists are the Mercedes A- and C-Class, demonstrating demand for premium models continues. But how does the UK’s top ten most popular cars compare to the most popular to lease? Find out here.