A 15% fall in new car sales in March marked the 12th consecutive month of declining car sales, according to the SMMT.
The 474,069 cars sold in March were not only substantially below the record 562,337 cars sold in March last year, but it was also behind the 518,707 cars sold in March 2015.
However it was the fourth highest sales for the month.
Explaining the extent of the fall, the SMMT pointed out that last year many drivers had brought forward their purchase of a car to March in order to avoid changing Vehicle Excise Duty (VED) rates which came into force in April 2017.
Mike Hawes, SMMT chief executive, said, “March’s decline is not unexpected given the huge surge in registrations in the same month last year. Despite this, the market itself is relatively high with the underlying factors in terms of consumer choice, finance availability and cost of ownership all highly competitive.
Others in the automotive industry were also unsurprised by the fall. Richard Jones, managing director of Black Horse, said: “It’s no surprise that March showed a decline in new car sales because the corresponding time last year saw demand pulled forward ahead of a change in Vehicle Excise Duty – and so sales were effectively inflated. This year we’re also seeing more of an impact of Brexit impacting both prices and also lower consumer confidence which particularly impacts big ticket purchases.
Similarly Ian Gilmartin, head of retail and wholesale at Barclays Corporate Banking, said: “There’s no disguising the fact that it’s another disappointing month for the new car sector. Achieving strong sales when new plate models hit the road is central to most sellers overall strategy, so there will be some concern at the continued slump revealed in these figures.
“However, the comparison with last March is a little misleading, as the record result posted then was in part due to sales being brought forward ahead of tax changes that came into place in April 2017. Some of the fall can also be attributed to a prolonged natural correction following a bumper couple of years, which we always knew was going to be unsustainable in the long run.”
As has been the case in recent months, a decline in diesel sales was responsible for the drop. There were 37.2% less diesel cars sold than in March last year. For March 2017, diesel market share was just 32.4%, compared to 43.5% the same month last year.
In contrast petrol sales increased slightly (0.5%) over the period to 296,349. Alternatively fuelled vehicles (AFVs) also grew, up 5.7% to 24,126.
Industry commentators have shown concern around the continued struggles of diesel cars. Hawes noted: “Consumer and business confidence… has taken a knock in recent months and a thriving new car market is essential to the overall health of our economy. This means creating the right economic conditions for all types of consumers to have the confidence to buy new vehicles. All technologies, regardless of fuel type, have a role to play in helping improve air quality whilst meeting our climate change targets, so government must do more to encourage consumers to buy new vehicles rather than hang onto their older, more polluting vehicles.”
Jones added: “Ongoing confusion around fuel choice is also playing out – diesel sales continue to drop, as customer confusion around Government policy towards it is contributing to a misinformed view on diesel. Our research shows that many drivers are simply not yet ready, or cannot afford, to buy electric vehicles. So we need to educate customers by explaining the pros and cons of petrol and diesel engines as they will continue to play an important role and also be the right choice for many drivers for at least the next decade.”
With a quarter of the year down, just under 720,000 cars have been sold, 12.4% less than last year.
Summing up the month, Chris Bosworth, director of strategy at Close Brothers Motor Finance, said: “Today’s figures come as a disappointment. Traditionally March is a popular month to buy vehicles as the new number plates are out, and this month’s figures should have been boosted by a spike in demand before the new VED changes set in. That said, petrol and alternative fuels remain the heroes of the forecourts, with diesel suffering and seeing yet another month of decline.
“As we begin the one year countdown to Brexit we expect turbulence in the sector to continue, but dealers are not powerless to adapt. They need to be willing and able to offer the most appropriate finance and stock to their customers, whether that’s diesel, petrol, or electric. The strong pound should ease the way and allow them to buy better value stock, while also offering breathing space for the losses incurred by cars sat on the forecourt.