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UK Car Sales in Decline

Wednesday 8th November 2017 15:18:34

UK Car Sales in Decline

 

As you may or may not be aware, the new car sales market is in decline and has been for the previous six months compared to the same period of last year. There are a number of factors contributing to the decrease in sales, such as the increase in PCP sales and also the decline in popularity for diesel models. 

 

It is a fall in sales that had been predicted by most market analysts and that is mainly due to the rapid increase in sales over the last 5 years. The market is very much cyclical and people tend to swap and change their cars over a three year term. Therefore, the decrease in sales was expected if not to the level that has actually happened. 

 

The increase in the popularity of the Personal Contract Purchase (PCP) has had a considerable effect on the market as it delays the need to replace the vehicle until possible. More and more people are choosing this as the preferred method of payment due to the low monthly payments and the incentive of either swapping the vehicle at the end or paying a lump sum (Balloon Payment) to keep the vehicle. 

 

Other factors have also contributed such as the increase in interest rates and rising inflation, resulting in disposable income being reduced and therefore less money to be swapping and changing cars. That said, it is only a small decrease and in fact the total number of sales is still more than the whole of 2012 with two months of sales left to go. Based on predicted figures, we expect the total number of new car registrations to be more than the year of 2013 but just short of 2014. The predicted total number of new car sales is just less than 2.5 million with 2015 and 2016 both surpassing the 2.5 million mark.

 

In terms of the used car market, the first quarter of the year looked promising as sales increased by 0.7%, however, the increase didn't last long as both the 2nd and 3rd quarters indicated a strong decline mirroring the new car trend. 

 

The decline in the sale of diesel models has also had a big impact on the market. After the Volkswagen emission scandal in 2015, there have been a number of things that have been changed by Government and also campaigns against diesel models over the air quality have also influenced sales figures. The new registration month of September usually provides an increase in sales, however, for diesel models this year, there has been a massive drop of 20% in sales compared to September the previous year.

 

According to the SMMT, Society of Motor Manufacturers and Traders, the uncertainty of the effects of Brexit, has had an influence on consumer confidence and therefore on the sales of 'big ticket' items such as a car. We see it in the news on the daily basis, but no-one really knows what is going to happen and we need to understand what is going to change, in order to have the confidence to purchase. 

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