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New Car Sales Plummet 20 Percent in April

4 May, 2017

Bob Stanley

New car registrations plummeted -19.8% to 152,076 units in April as buyers brought forward purchases ahead of the switch to new car tax (or more correctly vehicle excercise duty (VED) rates), which came into force on 1 April, 2017.

Demand was down across the board. Private buyer registrations fell by 28.4% whilst businesses and large fleets fell by 21.0% and 12.3% respectively.

Ian Gilmartin, head of retail and wholesale at Barclays, said: “A dip in new car registrations was anticipated by everyone in the industry following the duty changes introduced at the beginning of April. That said, a 20% fall is significant, and can’t be entirely attributed to the increase in VED. Consumers may be beginning to tighten the purse strings on large purchases given ongoing uncertainty in the wider economy. So, as has been predicted for some time we’re probably now seeing some levelling off in demand.”

Well, we put that case to the CarLease247 Technical Director, Paulo Larkman. He had this to say. "Well, you cannot come to any conclusion around the car market based on one months data. There are lots of things at play. It is probably better to look at the data on a quarterly basis. For example, I read earlier that new car registrations were up by 8% in March and down 20% in April. Therefore the figures are down by 12% net. This is simply not the case beacause you are comparing two year-on-year movements. The absolute number of vehicles that the 20% fall in April represents is around 25 thousand. By contrast, because nearly four times as many cars are registered in March compared to April, the 8% increase represents nearly 44 thousand. So regardless of the VED change, nearly 20 thousand more vehicles were registered across the two months. Finance is still relatively cheap due to a stagnant Bank of England base rate of 0.25% and the motor manufacturers are making better cars every year. I don't think year-on-year increases will go on forever, but I think the motor industry and motor finance industry are in a pretty good place."

Petrol, diesel and alternatively fuelled vehicle (AFV) registrations also declined, with AFV demand down for the first time in 47 months, albeit by a marginal -1.3%. Year to date, with new registrations in the first four months up 1.1% year-on-year to 972,092 – the highest level on record.

Mike Hawes, SMMT chief executive, said, “With the rush to register new cars and avoid VED tax rises before the end of March, as well as fewer selling days due to the later Easter, April was always going to be much slower. It’s important to note that the market remains at record levels as customers still see many benefits in purchasing a new car. We therefore expect demand to stabilise over the year as the turbulence created by these tax changes decreases.”

Winners an Losers

Well, the wooden spoon goes to Jeep with a staggering 72% drop in year-on-year sales. Gulp!

There were some winners though. Maserati and Lotus both did well, but arent really "everyday" cars. The marque that did best that we are most likely to drive is SEAT. We think we may have a clue why. The Ibiza is a cracking car, but hold on a minute, so is the Leon. Whatever - well done SEAT.

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Posted on 4th May 2017 at 4:27 PM

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