A slump in sales of new cars in the UK last month has sparked concern over the government’s post-Brexit strategy for auto manufacturers and its policy on electric vehicles.
Sales slid 15.7% in March, compared with the same month in 2017, according to figures compiled by the Society for Motor Manufacturers and Traders. The sharpest drop was seen in diesel vehicles, which plunged more than 37%.
Manufacturing policy confusing
The stark drop in the most important month for car sellers — when the new annual registration plate is released — is a blow to the industry as it tackles uncertainty over government manufacturing policy after Brexit. It’s also struggling to regain credibility after a series of scandals over falsified emissions tests.
With motor manufacturing at a record in the UK prior to the Brexit vote in June 2016, the industry’s performance after 2019 will be a key test of the government’s industrial policy outside the bloc.
“What a difference a year makes – 12 months ago the car industry was celebrating record new car sales,” said Alex Buttle, a UK based director of car buying website Motorway.co.uk. “Today, it’s facing something of a crisis with no clear plans to reverse its fortunes.”
Uncertainty denting sales
The SMMT said the sales slump looks worse because it follows a record March last year, when motorists clamoured to snap up new cars to beat the introduction of new road taxes.
Even so, the figures have worried the industry organisation, which said economic and political uncertainty as well as uncertainty over future emissions policy had deterred drivers from buying new cars this year.
“March’s decline is not unexpected given the huge surge in registrations in the same month last year,” said SMMT CEO Mike Hawes. “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.”
The government in Westminster is struggling to hammer out a deal for trade and industry after the UK leaves the European Union this time next year.
Manufacturers are pressing on with their UK production plans, with Toyota, Honda and Nissan committing to building new cars or expanding their factories in the next couple of years. But they warn their plans could change if a post-Brexit industrial deal is not finalised before the start of next year’s transition period.
Growing evidence that diesel emissions of deadly nitrous oxide are responsible for a sudden spike in UK roadside pollution has led the government to impose curbs on the fuel it once promoted as an answer to reducing greenhouse gases. New taxes on older engines come into force this month and some cities and districts have said they’ll ban them from their roads.
It’s the latest hammer blow for diesel after manufacturers including Volkswagen, Renault and Hyundai admitted falsifying emissions data on their cars in order to get past air safety checks. Many have been slapped with billions of dollars in fines.
Hawes said the government had done little to convince drivers to scrap their old diesel cars for new cleaner versions using the Euro 6 emissions standards. Instead, he said, ministers had sown confusion over what cars would escape proposed bans.
The “government must do more to encourage consumers to buy new vehicles rather than hang onto their older, more polluting vehicles,” he said.
One optimistic sign in the latest figures was the 5.7% growth in sales of electric and hybrid vehicles.
Even so, industry insiders say growth would need to be greater if the the government is to achieve its goal of full electrification of the UK’s roads by 2040.
“Will we see more action from the government? It can’t be blind to the poor state the UK car industry is in, and yet very little progress appears to have been made since the big 2040 announcement,” said Buttle. “The accelerator pedal also needs to be pushed on the government’s electric car infrastructure rollout to be attractive for would-be electric car owners. There are simply not yet enough visible charging points on UK streets to convince people to switch.”