06 January, 2020

UK car sales fall to six-year low amid Brexit and diesel slump

The British car industry suffered twin disappointments in 2019, with sales falling to a six-year low and average carbon dioxide emissions increasing further above new regulatory limits.

UK car sales fell by 2.4% year on year to about 2.3m, according to figures from the Society of Motor Manufacturers and Traders, with the industry body blaming Brexit uncertainty and the slump in diesel sales as the main factors.

This indicates the worst year for the UK market since 2013, when sales were 2.26m. They reached a peak of 2.7m in 2016 but have declined steadily since.

However, the increase in CO2 emissions may point to greater longer-term problems for carmakers selling in Britain. All manufacturers selling in the EU are rushing to meet emissions regulations that came into force at the start of the year. Average CO2 emissions rose for the third year in a row, up 2.7% year on year to 127.9g of CO2 per kilometre, the figures suggested – far above the target of 95g per kilometre they need to achieve over this year and next for all cars sold.

Mike Hawes, the SMMT chief executive, acknowledged the figures showed the challenge facing the industry. He said: “The step change that is required is significant.”

About half of the headline increase was caused by a change to testing standards. Another quarter of the change was caused by the 21.8% drop in diesel sales over the year. Newer diesels on average have lower CO2 emissions than petrol cars, despite a backlash prompted by air quality concerns. The final quarter was caused by increased sales of SUVs, which are often heavier and have much worse aerodynamic profiles than smaller cars. Increased fuel use by SUVs was the second largest contributor to the increase in global CO2 emissions from 2010 to 2018, according to the International Energy Agency.

Under the EU regulations carmakers face fines potentially running into billions of euros across the UK and the rest of Europe if they surpass individual limits designed to hit that target. Continued increases in emissions from cars would make it much more difficult for the UK to reduce overall CO2 reduction targets.

One bright spot in an otherwise difficult market was the rapid increase in sales of battery electric and hybrid vehicles, which combine an internal combustion engine with a battery-powered motor. Annual sales of alternatively fuelled vehicles rose by 20.6% to a record market share of 7.4%. That was driven by the surge in battery electric sales, which were up by 144%.

However, sales of battery electric vehicles would need to rise from the 1.6% market share for 2019 to 27% to hit the 95g target alone, according to the SMMT’s calculations.

Hawes repeated his industry’s plea for a post-Brexit trade deal that preserves frictionless trade between the EU and the UK, and that prevents the imposition of tariffs. He added that Brexit uncertainty remained his number one fear for the industry.

“Undoubtedly consumer confidence around our big-ticket items is weak,” said Hawes, speaking at a briefing in London ahead of the publication of final figures, due to be confirmed on Monday morning.

Source : The Guardian

Link : https://www.theguardian.com/business/2020/jan/06/uk-car-sales-brexit-diesel-electric-vehicles-emissions