Figures released today by the Society of Motor Manufacturers and Traders (SMMT) have shown a significant fall in the registrations of new diesel cars during May, down 20% on last year.
Overall new vehicle registrations fell 8.5% in another difficult month for manufacturers and dealers, following April’s dramatic 20% downturn. A total of 186,265 new cars were registered for the month, but the make-up of the market looks to have changed significantly.
Private car sales were the leading cause of the sales slowdown, down 14% on last year. This will be significantly affected by the looming General Election. Fleet sales were also down, although business registrations were up.
The beginning of the end for diesel?
As the table above shows, diesel sales slumped dramatically, with 20,000 fewer new diesel cars registered in May 2017 compared to last year. Diesel sales now trail petrol sales by a margin of nearly 100,000 cars for the first five months of the year, and diesel’s market share has fallen to levels not seen for many years.
Such significant falls in diesel car sales will be a challenge for manufacturers and dealers if the pattern continues at the current rate. Many industry analysts have been expecting a gradual decrease in diesel demand, but a 20% slump will be causing some urgent re-thinking in head offices around the UK.
New road tax charges have reduced one of the sales advantages of diesel cars, and the cost of diesel remains a few pence per litre higher than petrol. This is on top of the continued negative press surrounding diesel cars’ emission levels and the prospect of toxin taxes for diesel cars in coming years.
These factors have also impacted on residual values for diesel cars – which have traditionally been stronger than those for petrol cars. This will also ultimately drive up monthly payments for new diesel car finance offers. Expect discounts and deals on diesel models to increase immediately as retailers look to clear stock that is not selling.
This will particularly affect the big European brands who are heavily committed to diesel cars. Japanese brands like Toyota and Lexus, who have long preferred petrol hybrids to diesels, may be relative winners if diesel continues to decline in popularity. Volvo has also signalled that the current generation of diesel engines could be the last one it offers.
Continued growth for greenest vehicles
The alternatively-fuelled vehicle (AFV) segment improved following a dip in April. Numbers of EVs and hybrids were up by about 2,500 over last year, contributing to a new record market share of 4.4% – almost all of which will have come at the expense of diesel cars. This growth has improved the year-to-date results for the segment, which is running more than 27% ahead of last year.
The overall market year-to-date performance is down 0.6%, with increases in the business and fleet sectors failing to compensate for a 4.2% decrease in private new car sales.
Mike Hawes, SMMT Chief Executive, said that the SMMT “expected demand in the new car market to remain negative in May due to the pull-forward to March – which was an all-time record month – resulting from VED reform.”
Contrary to predictions that the General Election might boost car sales, Hawes suggests that it has “given many pause for thought and affected purchasing patterns in the short term”.
Ford Fiesta continues its reign at the top
As usual, the Ford Fiesta reigned supreme at the top of the charts in May. Its larger sibling, the Focus, struggled somewhat in comparison, sliding back to fourth.
Ironically, given that Volkswagen sparked the current anti-diesel crusade in the first place, one of the best performers of May was the Volkswagen Golf. It wasn’t all good news for Volkswagen, however, as the Polo fell out of the top ten sellers in May.
Additional reporting by Katharine Morgan.
