UK car sales slide 9 per cent in September as sector continues to contract

The latest figures also represent the sixth successive month that new car sales have been in reverse gear and also the first decline since 2011 for the key month of September.

Sales of diesel cars, which were down 21.7 per cent on the year, have been hit particularly hard by pollution concerns and air quality plans but the data showed the weakness in car sales runs far deeper than this.

September’s 8.8 per cent drop in private sector car sales indicates squeezed, uncertain consumers are reluctant to make major purchases, with car scrappage and trade-in schemes as well as discounting appearing to have had limited impact.

The further, sharp fall in fleet sales (down 10.1 per cent year-on-year) in September indicates that businesses have become more cautious in their car purchases in response to sluggish economic activity and heightened economic and political uncertainties.

Businesses may be increasingly inclined to delay replacing their vehicles.

Car sales are also likely to be hampered by mounting pressure to restrict car finance deals and unsecured consumer credit. The Bank of England (BoE) has shown mounting concern over this and is keen for a more responsible approach to be adapted. This is magnified by concerns over the resale value of cars at the end of Personal Contract Purchase (PCP) deals.

“September is always a barometer of the health of the UK new car market, so this decline will cause considerable concern,” said SMMT chief executive Mike Hawes.

“Business and political uncertainty is reducing buyer confidence, with consumers and businesses more likely to delay big-ticket purchases.”

Howard Archer, chief economic advisor to the EY ITEM Club said: “It is notable that private sales have been by far the weakest sector over 2017 so far. They were down 6.1 per cent year-on-year over January-September, compared to the overall 3.9 per cent drop in car sales. This is consistent with the overall softness in consumer spending this year, particularly a reluctance to make major purchases.”

“New sales to the fleet sector were down 10.1 per cent year-on-year in September after drops of 3.2 year-on-year in August and 10.1 year-on-year on July. This will be of significant concern to the car sector as the fleet sector had held up pretty well through the first half of 2017.

“This indicates that businesses have become more reluctant to replace or add to their fleets amid weakened economic activity and a highly uncertain outlook. Fleet sales were down 2.1 per cent year-on-year over the first nine months of 2017.

“Reinforcing the weakened picture, new car sales to the business sector fell 5.2 per cent year-on-year in September, although this sector is now tiny with sales at just 21,826 in September.”