U.K. Vehicle Sales Drop Linked to Consumer Confusion

The U.K. new car market declined for an eighth consecutive month in November as confusion over government policies stifles the market.

The Conservative government is raising taxes on new diesel cars starting in April unless they meet a new standard called Real Driving Emissions Step 2 – a certification that does not take effect until 2020, meaning no new cars will be able to prove they meet it.

The result is vehicle buyers are keeping their hands in their pockets.

Society of Motor Manufacturers and Traders figures show November sales fell 11.2% year-on-year to 163,541 – driven by a significant 30.6% fall in diesel demand to 61,730.

Business purchases slumped 33.6%, fleet sales declined 14.4% and private sales fell 5.1%.

The SMMT says sales fell across all body types except specialist sports, which grew 6.7%. The biggest declines were seen in the executive and mini segments, which dropped 22.2% and 19.8%, respectively, while demand in the supermini segment slipped 15.4%.

Alternatively fueled vehicle sales grew 33.1% to 8,867 units and gasoline-powered cars rose 5.0% to 92,944.

The trade group says the diesel slump follows months of confusion and speculation about the government’s air-quality plans and its policies toward diesel cars.

SMMT CEO Mike Hawes says year-to-date sales were down 5.0% at 2,388,144 units.

“An eighth month of decline in the new-car market is a major concern, with falling business and consumer confidence exacerbated by ongoing anti-diesel messages from government,” Hawes says in a statement.

Diesel remains the right choice for many drivers, not least because of its fuel economy and lower CO2 emissions, he says.

“The decision to tax the latest low-emission diesels is a step backwards and will only discourage drivers from trading in their older, more polluting cars. Given fleet renewal is the fastest way to improve air quality, penalizing the latest, cleanest diesels is counterproductive and will have detrimental environmental and economic consequences.”

Light-commercial-vehicle sales plunged 11.1% in November to 26,486 units, the segment’s third consecutive monthly fall. Year-to-date, the LCV market was down 4.1% at 334,133 units.

Meantime, new research from Mercedes-Benz Vans suggests the latest environmental legislation – a pledge to create clean-air zones (CAZs) in major U.K. cities within two years – is leaving key road users confused and concerned about what they mean and how they will work.

The Mercedes-Benz Vans Business Barometer finds one in five van drivers, owners and operators have not heard about the proposed zones, while 41% say they fear they could hurt their business.

“CAZs undoubtedly have a positive impact on the environment and our health,” Mercedes-Benz Vans Managing Director Steve Bridge says. “But equally, business owners need to know the impact these zones will have on them. To not have clear plans in place that are communicated effectively is doing a disservice to the hardworking business community.”

Elsewhere, consumer advisor What Car? Editor Steve Huntingford says Chancellor Philip Hammond caused mass confusion over the future of cleaner diesels in his budget with the unreachable new diesel standard.

Huntingford says the car-buying public is only at the start of the journey from switching from ICE-powered cars to electric ones.

“Until more people are convinced of the benefits of electric cars, the government should be trying to encourage people to move into newer, cleaner cars rather than punishing them for doing so with added taxes,” he says in a statement.

Nathan Coe, chief operating officer of digital marketplace website Auto Trader, says the ongoing demonization of diesel only confuses consumers and hampers manufacturers’ production plans.

He says this is on top of Brexit casting a shadow over consumer confidence and exchange rates impacting the profitability of U.K. new-car sales.

“These challenges will continue until firmer plans are laid out by the government to enable stability and confidence,” Coe says.