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Tax rises fuel record March car market

Manic March as buyers rush to showrooms.

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The UK new car market enjoyed its biggest month on record in March, registrations jumping by 8.2 per cent fuelled by looming Vehicle Excise Duty (VED) changes and new registration plates.

According to figures released by the Society of Motor Manufacturers & Traders (SMMT), 562,337 cars were registered during the month – more than double those recorded in January and February combined.

The first quarter results were also a record, up 6.2 per cent to 820,016 units.

17-plate buyers

March is always a busy month for car dealers due to the twice-yearly change in registration plates, this month to 17 plates. However observers believe most of the sales growth was due to buyers avoiding new VED rates that came into force on 1st April, adding extra costs to the vast majority of new cars (For the full story of the tax changes see here).

“These record figures are undoubtedly boosted by consumers and businesses reacting to new VED changes, pulling forward purchases into March, especially those ultra-low emission vehicles that will no longer benefit from a zero-rate fee,” SMMT chief executive Make Hawes said.

“This bumper performance probably means we will see a slowdown in April, exacerbated by the fact there are fewer selling days this year given Easter timing,” Hawes added.

Opinions differed as to how much looming tax hikes affected the market.

However not everyone was convinced by the tax argument, one dealer telling The Car Expert that he did not believe consumers fully understood the implications of the changes and that the market had been artificially boosted by manufacturers pushing incentives.

The dealer said that after a reasonably strong January and February, his business had exploded in March. But he predicted that the second quarter of the year could be much more difficult, particularly as the triggering of the Brexit process would add uncertainty in the minds of consumers.

Hawes also believes the market will slow over the rest of 2017, but not significantly. “Looking ahead to the rest of the year, we still expect the market to cool only slightly given broader political uncertainties as there are still attractive deals on offer,” he said.

Fleet sales bouyant

Much of the March market was driven by fleet sales, for which the VED changes will add significant extra costs. The 12 per cent increase in the fleet and business sector also no doubt accounted for a halt to recent sliding diesel sales, registrations climbing 1.6 per to 295,256 vehicles.

The alternative-fuelled sector, which includes electric cars, continued its steep climb. Registrations surged some 31 per cent in March to 22,818, though this still represents only 4.1 per cent of the overall market.

Meanwhile the New Car Top Ten continues to have a familiar look about it, with the Ford Fiesta still secure in the number one spot. some 25,428 examples were registered in March, more than 8,000 ahead of nearest rival the Ford Focus.




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Andrew Charman
Andrew Charman
Andrew is a road test editor for The Car Expert. He is a member of the Guild of Motoring Writers, and has been testing and writing about new cars for more than 20 years. Today he is well known to senior personnel at the major car manufacturers and attends many new model launches each year.