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'Grave concern' as low emission car sales fall for first time in 26 months

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
A BMW I3 electric car charges its battery. Photo: Sean Gallup/Getty Images

Car sales continued to decline in Britain in June, with manufacturers warning that confusion over government policy is putting off consumers.

The Society of Motor Manufacturers and Traders (SMMT) said on Thursday that new car sales fell by 4.9% in June. June marked the fourth consecutive month of declining car sales in the UK and new registrations fell by 3.4% to 1.27 million across the first half of 2019.

Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, said sales in the second quarter of 2019 were “likely were artificially low due to the previous March deadline for Brexit.”

“Many buyers appear to have brought forward purchases to Q1, given the risk that car prices would have risen in the event of a no-deal Brexit at the end of March,” he said.

However, worryingly for car manufacturers, sales of alternative fuel vehicles such as plug-in hybrids and hydrogen fuelled cars fell in June. Low emission vehicle sales fell by 4.9% in June, the first monthly decline in 26 months.

“Another month of decline is worrying but the fact that sales of alternatively fuelled cars are going into reverse is a grave concern,” said Mike Hawes, the CEO of the SMMT.

“Manufacturers have invested billions to bring these vehicles to market but their efforts are now being undermined by confusing policies and the premature removal of purchase incentives.

Sales of battery powered cars rose by 61.7% in June but the rise was offset by declines for hybrid and plug-in hybrid vehicles.

Hawes said: “If we are to see widespread uptake of these vehicles, which are an essential part of a smooth transition to zero emission transport, we need world-class, long-term incentives and substantial investment in infrastructure.”

Low emission vehicles accounted for just over 15,000 new car sales in June, out of a total of 223,421 new registrations.

“The issues in motor manufacturing and supply are taking their toll on car registrations, leaving dealers feeling the pressure,” said Seán Kemple, Director of Sales at Close Brothers Motor Finance.

“The weather has not helped our case; a rainy June left buyers hesitant to hit the high street, and that included big ticket purchases like cars. As we move towards the traditional summer slowdown, dealers must be sure to focus on their digital showroom.”

Tombs said car sales would likely recover in the third quarter “given that real wages are rising briskly and consumers’ confidence in the outlook for their personal finances remained above its 35-year average in June.”

The Ford Fiesta was the UK’s best selling car in both June and the whole first half of the year.

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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut.

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