U.K. April Sales Plunge as Tax Increase Kicks In
Society of Motor Manufacturers and Traders CEO Mike Hawes says the rush to buy new cars and avoid the tax hike before the end of March, plus fewer selling days due to a later Easter, meant the April slowdown was likely.
A tax increase drove the U.K. new-car market down 19.8% to 152,076 units in April, but drivers who bought forward to avoid the hike helped keep the market’s year-to-date performance at record levels.
The Society of Motor Manufacturers and Traders says the higher vehicle-excise-duty tax resulted in a 1.3% downturn in sales of alternatively fueled vehicles, the segment’s first decline in 47 months.
Most new-vehicle buyers are paying an increased VED tax and the exemption for low-emissions gasoline and diesel cars is ending. The exemption now applies only to vehicles with no tailpipe emissions, such as electric and hydrogen models.
SMMT figures show April demand fell across the board, with purchases by private buyers down 28.4%, businesses down 21.0% and large fleets off 12.3%.
The Ford Fiesta remained the U.K.’s best-seller with 4,957 units.
SMMT CEO Mike Hawes says the rush to buy new cars and avoid the VED tax hike before the end of March, as well as fewer selling days due to a later Easter, meant the April slowdown was likely.
“It’s important to note that the market remains at record levels, as customers still see many benefits in purchasing a new car,” Hawes says in a statement. “We therefore expect demand to stabilize over the year as the turbulence created by these tax changes decreases.”
U.K. year-to-date sales were up 1.1% at 972,092 units, a record for the month.
Light-commercial vehicle sales fared badly, falling 18.8% in April to 22,625 units.
Hawes says the result follows a period of rapidly growing levels of demand, including an April sales record.
“April is traditionally a small month for new LCV registrations following the plate-change in March and, coming on the back of double-digit growth that resulted in a record April in 2016, this month’s decline comes as no surprise,” he says.
“Overall, the market remains robust, however, and so long as business confidence among operators can be maintained, we expect to see the market remain at what is a historically high level over the course of the year.”
The Ford Transit Custom was the market leader in April with 2,582 deliveries, and year-to-date with 17,849 units – double its nearest competitor.
Market leader Ford sold 23,062 units in April and had five models in the top 20 – the Fiesta (first), Focus (fifth), Transit Custom (12th), Kuga (18th) and Transit (19th).
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