First drop in car sales since 2011 blamed on diesel ban

UK car sales declined in 2017 after five years of rapid growth, with the industry blaming government for a lack of consumer confidence in diesel vehicles.

Total sales last year were 2.54 million new vehicles, a decline of 5.6 per cent on 2016, with diesel sales dropping 17 per cent. Despite the decline, 2017 sales remained near the highest on record.

The Society of Motor Manufacturers and Traders (SMMT), the UK automotive industry’s trade body, has forecast a further five to seven per cent decline in sales in 2018.

While sales reached a record high in March, by December they were down 13.9 per cent year-on-year, with 152,000 fewer cars sold than in the same month in 2016.

Sales of diesel cars dropped by 31 per cent in December, while petrol car sales dropped by 1.6 per cent, after minor tax changes targeting diesel in the November Budget.

Earlier in the year, sales dropped after changes which came into effect on vehicle excise duty, as well as a government air quality plan which was widely reported as an eventual ban on diesel vehicles.

The UK auto industry has been strongly critical of the government’s Brexit strategy and has warned that continued uncertainty was reaching a critical point, as manufacturers considered if and where to invest in factories and production.

Mike Hawes, the SMMT’s chief executive, said: “Undoubtedly what we’ve seen since [the 2016 referendum] is reduction in economic growth consumer confidence indices show that people’s willingness to buy big-ticket items has declined.

“Exchange rates are going up, and will push up the price of cars given that 86 per cent of cars we buy in the UK are imported and the majority of parts that go into British-built cars are also imported.

“Some investment decisions are overdue. We need clarity [on the terms of a transitional period] by the end of the first quarter.”