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Decline in car sales eases but diesel collapse continues

The decline in new car sales slowed in February but demand for diesel-powered vehicles continued to tumble.
Official data showed that new car registrations - a proxy for sales - declined by 2.8pc last month compared with a year ago.
Figures produced by the Society of Motor Manufacturers and Traders (SMMT) revealed 80,805 new cars were sold in February - the 11th month running to record a decline. Demand has been hit by a economic uncertainty related to Brexit.
February is traditionally a slow month for the industry, and lower sales can magnify swings in demand. March’s registration plate change - which boosts demand - also means February's sales can be skewed.
Decline in car sales eases but diesel collapse continues

However, February's drop was less than half of the 6.3pc fall reported in January. In the year to date sales are down 5.1pc at 244,420.
Diesel continued to suffer due to public confusion over government policy on the fuel and the continued impact of the dieselgate scandal.
Ministers are trying to drive diesel cars off the roads, arguing they produce more harmful nitrous oxide pollution than petrol cars. This is fiercely disputed by the car industry, which says the latest diesel engines are as clean - if not cleaner - than petrol engines. Diesel also generates lower levels of carbon dioxide than petrol.
Sales of diesel vehicles showed a 23.5pc year-on-year decline, and cars powered by the fuel made up just 35pc of the total market. This compares with 44.5pc a year ago.
Decline in car sales eases but diesel collapse continues

Diesel is under pressure over pollution, leading to collapse in demand for cars powered by the fuel 

Credit:
Reuters
Petrol now hads 60.6pc of the market, up from 51.5pc a year ago, and alternatively fuelled vehicles (AFVs), such as electric and hybrid cars, have 4.4pc, a 0.4 percentage point rise.
Mike Hawes, SMMT chief executive, said although the new car market had “dipped, it remains at a good level despite the drop in demand for diesel”.
However, he warned to expect the market to decline again in March, despite the coming number plate change. A change in Vehicle Excise Duty (VED) introduced last April meant that consumers rushed to buy cars in March, inflating demand.
Howard Archer, chief economic adviser to the EY ITEM Club said the car industry could take “limited consolidation” from the slowing decline in sales in past two months.
“The February and January declines were less than the double-digit year-on-year drops seen over the previous three months: 14.4pc in December, 11.2pc% in November and 12.2pc in October,” he said.
Decline in car sales eases but diesel collapse continues

The March registration plate may not see the normal boost to slaes 

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Getty
“It’s possible that sales in January and February suffered modestly as a consequence of some car sales being brought forward into the first quarter of 2017 by buyers looking to beat the changes to VED.”
Lower demand for new cars will continue to decline for 12 to 18 months until consumer confidence recovers, according to Justin Benson, head of automotive at KPMG.
“Consumer confidence is low and the evidence suggests people are keeping their cars for longer before making a buying decision,” he said. “Whether or not this is due to Brexit is hard to say, but the automotive industry needs certainty in order to maximise new car sales growth."
He added: “Declines will continue until they consumer confidence finds a new stable level, and I don’t think that will come for at least a year.”
Decline in car sales eases but diesel collapse continues

Interest rate rises from the Bank of England could further harm sales

Credit:
Getty 
The sentiment was echoed by Callcredit lnformation Group. It said a rise in interest rates could further drive down new car sales as consumers find themselves under further pressure.
The industry is now “resigned to weak numbers” according to Alex Buttle, director of car buying comparison website Motorway.co.uk.
“The catalyst for growth is proving elusive and it's a trend the industry is desperate to reverse, but despite doing its best to promote the benefits of Euro 6 diesel cars, there is little sign that sales will tick upwards any time soon,” Mr Buttle said. “There are few rays of light to suggest better figures ahead.”
So far this year, new car sales to business buyers are down 29.8pc to 5,665 cars, while private buyers are off 7.1pc at 104,682 and fleet buyers are 2.1pc lower at 134,073 cars.
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