March is what’s known as ‘plate change month’, meaning the release of brand new shiny vehicles and the first set of the new number plates are released. New registration plates transformed from September’s 67 registration to March’s 18 plate vehicles. This normally causes a spike in new car sales as people purchase brand new vehicles to put on their driveway. March 2017 saw a record high for new vehicles sales however there was a dramatic drop recorded this year. But why?
New car sales figures highlight a major decrease of 15.7 percent compared to the same month in 2017. Diesel cars sales suddenly plunged with a decrease of 37 percent while petrol very marginally increased by a small 0.5 percent. On the other hand, AFVs (An alternative fuel vehicle, which is a vehicle that’s run on a type of fuel that’s different to the conventional petrol or diesel – essentially hybrids or electric vehicles) showed an increase of 5.7 percent. But what does this mean to the Motor industry? Are we taking small steps closer to an electric future?
Goodbye to diesel cars?
Diesel cars are showing the largest decrease in sales. In March 2018 there were 562,337 sales, 153,594 of these were diesel vehicles, with new registrations plummeting 37.2%. According to a test backed by the government, diesel cars have greater fuel efficiency, so why aren’t they selling? Diesel car owners could be facing extra bills to drive into towns and cities as part of an effort to lower pollution. The tax change will affect cars that emit between 191g/km and 225g/km of CO2. This will only apply to brand new vehicles as fortunately it will not apply for existing cars, a sigh of relief for those with a used diesel car! The two main changes that will be coming into effect April 1st are:
- Authorities want to encourage people into buying cleaner, lower emission cars by increasing the price of car tax. New diesel cars will increase one tax band higher. In simple terms, on each new diesel vehicle taxed it will add between £15 and £520 to the cost of taxing for the very first time
- Diesel vehicles will rise 4% higher than an equivalent petrol car for company car tax
These changes will affect a large amount of diesel drivers, with even the cleanest and smallest of diesel motors facing a rise of £20. Similarly, large diesel vehicles with the highest emissions will take the largest hit as their tax price could hit heights of £500. For example vehicles like the Audi SQ7 4.0 litre TDI – 199/km which retails at £88,295 and also the Bentley Bentayga 4.0 litre V8 – 210g/km at £137,055. But, is this the reason for car sales descending massively with diesel taking the biggest hit?
The cars mentioned above are simply a dream to the majority of people, so below are a few examples of affordable vehicles that tax could increase by 25 times, under the new tax rules:
- Ford Focus 1.5 TDCi 120 ST-Line Navigation 5dr Powershift
- Mitsubishi Outlander 2.0 PHEV 4hs 5dr Auto
- Audi A3 1.6 TDI SE 5dr S Tronic
- Lexus GS300h 2.5 F-Sport 4dr CVT
As well as this there has been an increase in the demand for second hand diesel cars as drivers look to avoid the tax increase on new cars. Experts in the car industry have suggested that second hand diesel sales are increasing and new car sales are decreasing because people are hoping to sell their high emission diesel cars before the taxes cause them to devalue rapidly. This therefore could be another factor that is contributing to the reduction in new car sales.
London are introducing a £10 T charge. This is being introduced for older vehicles driving in central London. For more information about this and also petrol or diesel vehicles please read our previous blog Petrol or diesel, you decide!
Are electric or hybrid cars the future?
Since 2013, UK plug-in cars, from hybrids up to fully electric cars have had a huge increase in sales. Rising from 3,500 to more than 135,000 being driven on the roads. The Government are also clearly noticing this rapid increase and are taking action by installing around 14,900 places to charge your vehicles around the UK publicly. There are now 60 plug in models for you to choose from if you are thinking about going electric/ hybrid.
What is a Hybrid car?
This a vehicle with a petrol or a diesel engine combined with an electric motor. They are proven to produce less CO2 and consume far less fuel due to the use of the electricity. Another reason why people may switch from the standard diesel or petrol car is because hybrid vehicles have a considerably lower road tax and company car tax.
Steps are being made by the chancellor to improve accessibility to chargers, as they have announced the funding of £400m for new charging points across the UK. This will possibly encourage buyers of hybrid/electric vehicles and encourage them to make the step into the future.
So it’s clear that the government are introducing more charger points around the country for these types of vehicles however the most effective and common way is the overnight charge at home. Charging costs about £3.64 for a full charge which gives around 115 miles on a 30kW Nissan Leaf. While out, either at work or in a public car park the majority or places and organisations offer free charging to their visitors.
Could car finance be the reason why new car sales are low?
Car dealerships that offer finance options on used cars saw a significant increase of 15% in sales figures compared to the previous year. In comparison to this, the number of new cars that were financed fell by 2%.
Another option to purchase a car is Personal Contact Purchases (PCP’s) have proven very popular amongst new car buyers. This allows customers to purchase a new car, paying less on their monthly payment due to an optional final payment at the end to keep the car. Furthermore, this entices people to the idea of receiving a new car at the end of the contract, encouraging more sales. Another benefit of the PCP is most company’s bundle the first year’s road tax in with the deposit, so most customers will save paying for road tax and will not be affected by tax increases.
Is Brexit affecting car sales?
As you are probably aware, Brexit is at a very uncertain stage. Motorists may be concerned about their personal finances. Trading of vehicles across the EU may be affected due to the fall of the pound and prices of vehicles increasing due to imported cars and parts becoming more expensive. The motor industry have pledged for an end to this and for an agreement to be made between the UK and the EU to stop sales figures from decreasing even further. Due to new vehicle sales figures already dropping by 37.2% it does look as if Brexit is playing a huge part in the public’s confidence to committing to finance deals.
Sales have not fallen on this scale since 2009, so clearly the uncertainty is having a huge effect.
If you are looking to purchase a new car and struggling to decide on the car you want, here is a list of the top 10 best-selling cars in March 2018:
- Ford Fiesta
- Volkswagen Golf
- Nissan Qashqai
- Ford Focus
- Vauxhall Corsa
- Ford Kuga
- Merc-Benz A Class
- Vauxhall Mokka X
- Merc-Benz C Class
It’s safe to say that this year new vehicles sales have certainly taken a plunge due to a number of different factors. However with Brexit taking steps forward, PCP vehicle purchases increasing and more charging points being made available across the country these figures may soon change.