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January 5, 2018

UK new car market declined in 2017

The UK's new car market declined by 5.7% in 2017, although the market - at over 2.5m units - was still the UK's third highest in ten years.

The UK's new car market declined by 5.7% in 2017, although the market – at over 2.5m units – was still the UK's third highest in ten years.

Sales of diesel cars plunged sharply – down by 17.1% – in 2017. Diesel share of the car market had slumped to just 37.8% by December compared with 47% in December 2016. For the year as a whole, diesel share was down to 42% versus 47.7% in 2016.

Car sales in the month of December were down by 14.4%, the ninth consecutive month of negative growth, resulting in a final annual tally of 2,540,617 units.

Private, fleet and business registrations were all down in 2017, with demand from private motorists declining 6.8%, while fleets saw a fall of 4.5%. The biggest percentage losses were seen in business registrations, with the sector ending the year down 7.8%.

The most popular vehicle choices were, once again, superminis, small family cars and SUVs, with the latter the only segment to grow demand in 2017.

There was good news for the alternatively fuelled vehicle market, which grew 34.8%. A record number of hybrid, plug-in hybrid, battery electric and hydrogen fuel cell cars were registered – resulting in the sector's highest-ever annual market share of 4.7%. The UK is Europe's biggest market for plug-in cars (BEVs + PHEVs), with 47,263 registered in 2017.

Demand for petrol cars also rose in the year, but by a more modest 2.7%. However, this was not enough to offset a -17.1% decline in diesel registrations – with anti-diesel rhetoric and the potential for tax hikes causing buyers to hesitate, the SMMT said.

Latest calculations by SMMT highlight the money saving benefits of diesel cars, with drivers of diesel-powered D-Segment family vehicles, SUVs and executive cars saving an average of between GBP300 and GBP400 a year on their fuel bills.

Further market weakening expected in 2018

Mike Hawes, SMMT Chief Executive, highlighted the problems for diesel and also warned that low economic growth points to a further weakening of demand this year. He said: "The decline in the new car market is concerning but it's important to remember demand remains at historically high levels. More than 2.5 million people drove away in a new car last year, benefitting from the latest, safest, cleanest and most fuel efficient technology.

"Falling business and consumer confidence is undoubtedly taking a toll, however, and confusing 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. Consumers should be encouraged to buy the right car for their lifestyle and driving needs irrespective of fuel type – whether that be petrol, electric, hybrid or diesel as it could save them money.

"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."

Despite the overall car market decline, the SMMT pointed out that new car registrations in the UK 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 to suit all lifestyles – and on attractive finance terms. The trade association added that some 60 new models are set to make showroom debuts in 2018.

What's gone wrong in the UK car market? (BBC News article; includes comment from just-auto) 

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