View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
July 5, 2017

UK new car market down 4.8% in June

The UK new car market has declined for a third consecutive month with 243,454 new units registered in June, according to figures released by the SMMT.

By David Leggett

The UK new car market has declined for a third consecutive month with 243,454 new units registered in June, according to figures released by the SMMT.

The SMMT said that new registrations fell at a slower pace than in the previous two months, by -4.8%, as demand continued to stabilise following a record first quarter and the subsequent market turbulence caused by the recent changes to Vehicle Excise Duty.

The UK car market is now more in line with 2017 forecasts (see below), it said.

Demand in the month was down across private, fleet and business registrations, recording falls of -7.8%, -2.4% and -8.3% respectively. Meanwhile, the alternatively fuelled vehicle sector enjoyed notable growth, with demand rising 29.0% to 10,721 units to maintain a record 4.4% market share for a second month. Petrol registrations rose by 2.5% and diesel fell -14.7%.

Compact cars, typically powered by smaller petrol engines, proved most popular for all buyers, with superminis and small family cars accounting for almost 60% of the market. Small family cars and SUVs were the only two segments to register growth in June, up 6.0% and 11.3% respectively.

Year-to-date, overall performance remains strong, falling slightly by -1.3% to 1,401,811 units and putting the market on track to meet 2017 forecasts. Fleet and business buyers drove demand across the first six months with registrations up 1.5% and 2.7% respectively in contrast to a -4.8% drop in private purchases, although almost 650,000 consumers have chosen a new car this year.

Mike Hawes, SMMT Chief Executive, said, “As forecast, demand for new cars has started to cool following five consecutive years of solid growth but the numbers are still strong and the first half of the year is the second biggest on record. Provided consumer and business confidence holds, we expect demand to remain at a similarly high level over the coming months. It’s encouraging to see alternatively fuelled vehicles experiencing rapid growth but adoption is still at a relatively low level and more long term incentives are required if this new generation of vehicles is to be a more common sight on British roads.”

Sue Robinson, Director of the NFDA, also highlighted the trend for stabilisation in the market. “New car registration figures for June demonstrate the stability of the UK new car market,” she said. “The market remains at near record levels marking the second strongest first half-year on record. Going forward, we anticipate a stable second half of the year as our members continue to experience good customer footfall.”

John Leech, head of automotive at KPMG UK, took a more negative tone on the June results. “UK new car sales declined 4.8% in June, reflecting a cooling underlying market. The drop in sales signals the softening in consumer confidence that has been seen more widely in the economy this year, and is in part a reflection of a decline in household income and recent political uncertainty.

“Looking to Europe, the major markets of Germany, France and Italy are performing strongly and this, coupled with sterling’s weakness, is causing vehicle manufacturers to reduce UK incentives and volume expectations.  Diesel sales fell sharply again, by almost 15%, as consumers continue to react to the negative headlines around air quality, despite no planned regulatory action against Euro 6 diesels. 

“Consumer thirst for PCP deals, however, has not yet been impacted by the recent negative press, but as these headwinds continue to impact the UK market we forecast a 5% decline in the new car market during the second half of 2017.”

SMMT UK car market forecasts

For 2017, the SMMT forecasts UK new car sales at 2.622m units, 2.6% down on 2016’s level of 2.693m. This year, diesel share is projected to fall back further with diesel car volume at 1.175m units, and a 44.8% share of total new car sales (47.7% in 2016; it was 50.8% in 2012).

For 2018, the SMMT anticipates a further fall in the UK car market to 2.515m units, down 4.1% on the 2017 forecast level. Diesel volume also declines further to 1.168m, but the SMMT forecasts that diesel share stabilises at 46.5% of total car registrations.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. The top stories of the day delivered to you every weekday. A weekly roundup of the latest news and analysis, sent every Monday. The industry's most comprehensive news and information delivered every quarter.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy


Thank you for subscribing to Just Auto