New car registrations fall for third consecutive year

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4 mins read

6 January 2020

UK car registrations fell for the third consecutive year in 2019, dropping 2.3% to 2.3 million cars according to preliminary figures released by the Society of Motor Manufacturers and Traders (SMMT). Following 2016’s high, registrations have now fallen 7.5% - the equivalent of 580,000 registrations across the year.

While that figure puts the UK market at a seven-year low - with 2013’s 2.26m registrations restricted by an economy emerging from recession - it is still ahead of the ten-year average, albeit with that figure skewed by the collapse of registrations to below 2.0m at the height of the recession in 2009.

Last year’s fall came despite 2018’s supply of new vehicles being severely restricted by the requirement to re-homologate them to meet new emissions regulations. Despite that artificial drop, during 2019 nine of the 12 months recorded year-on-year registrations falls.

Why did 2019’s new car registrations fall?

Private registrations fell 3%, while fleet registrations rose around 1%. Highlighting that split, SMMT chief executive Mike Hawes said the fall was chiefly down to consumer confidence being low in light of political and economic instability and public confusion over the legislative approach to Euro 6 diesels, particularly in upcoming clean air zones. While petrol registrations rose 2.3%, diesel registrations fell 21.8%, making up just over 25% of the market and falling to its lowest market share since 2003.

“Consumer confidence for big ticket items just isn’t there at the moment, and there’s clear evidence of that impacting car sales,” said Hawes. “It’s also evident that people are confused about clean air zones and whether diesels will be allowed in them. The Government approach is that they should be and that they can be part of the solution, but the situation needs clarity and to be uniformly applied - we don’t want a patchwork of regulations.”

While numerous clean air zones are planned for city centres around the UK, only Bristol has applied so far to ban all diesels, something which remains subject to Government approval.

The only sectors of the car market as defined by the SMMT to grow in 2019 were the so-called Dual Purpose category for large 4x4s, which rose 12% and the Specialist Sports Vehicles category, which rose 19.2%, boosted by the pent-up demand for the Tesla Model 3. The two largest categories, Superminis and Small Family Cars, accounted for 57% of the market but fell 6% and 4% respectively.

Electric car registration growth, but warnings over grant reduction

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Full electric car (BEV) registrations rose 144%, but accounted for just 1.6% - or 38,000 - of all registrations, while Alternatively Fuelled Vehicles (AFV), encompassing all hybrids and electric vehicles, rose 20.6% to account for 7.4% of the whole market. Hybrids dominated AFV registrations, rising 17% year-on-year and accounting for 98,000 vehicles.

Notably plug-in hybrid registrations fell by 17.8%, taking a 1.5% market share - below that of pure electric vehicles. This was largely down to supply issues, although Hawes cautioned that it also showed the impact of removing the £2500 grant previously given to buyers by the Government in 2018. “The technology is intrinsically more expensive, even in some cases when you factor in whole life costs, and we need to stimulate the market,” he said. “The drop is a clear warning that buyers are not yet ready to commit unless they are incentivised.”

Grants of up to £3500 for electric cars are due to end in March, with no replacement yet announced. As a result Hawes cautioned the SMMT couldn’t predict future EV registration levels, saying: “What’s clear is that the Government is committed to tackling climate issues. Our industry is committed to playing its part too, but what’s clear is that while it can supply the vehicles it cannot force demand for them. The markets where EV sales are rising are all driven by incentives - for plug-in hybrids and pure electric vehicles, and we’re hoping that both will be addressed.”

Average new car CO2 figure rises again

Hawes also warned that a consequence of the drop in diesel registrations was a rise in the average CO2 emitted by new vehicles sold for the third consecutive year, up 2.7% year-on-year to 127.9g/km.

Around half of that rise was as a result of the academic switch to measuring using the more stringent WLTP test method, but a quarter was down to the drop in sales of diesels, with a further quarter a result of buyers opting for heavier vehicles, predominantly SUVs.

The average CO2 figure is particularly pertinent because manufacturers must hit a European-wide average of 95g/km by the end of this year. Britain will be included in that target but, if Brexit progresses as expected, from 2020 onwards it will have to hit the figure based on its own registrations alone.

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The SMMT has suggested that to achieve that BEV registrations would have to rise from 1.6% to 27% of the market, or alternatively-fuelled vehicle registrations from 7.4% to 56% of the whole market, assuming petrol and diesel registrations remained constant.

2020’s new car registrations expected to fall again

The SMMT provides regular updates for new car registration predictions, based on polling car makers in the UK.

It’s latest poll was conducted after December’s General Election and suggests a total of 2.27m registrations during the year, down a further 1.6% on 2019. However, this figure was greater than that predicted back in October, rising from 2.2m.

“Consumer confidence is the main issue and it is impossible to predict how it will swing,” said Hawes. “Nobody wants to see decline, but the factors affecting it are mostly out of our control. All in all it is not a pretty picture - although nor is it a disastrous one.”

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