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Car sales rev up but diesel demand crashes

Sales of new cars rose 3.4pc in May, the second consecutive month of improvement, but the positive picture is flattered by the market’s collapse a year ago.
Official data on UK new car registrations showed a year-on-year rise with 192,649 cars sold in May, an increase of 6,384.
However, sales a year ago were driven down as motorists had raced to buy cars at the start of 2017 ahead of the introduction of higher vehicle excise duty.
Car sales rev up but diesel demand crashes

New car registrations are the most accurate measure of gauging sales of new vehicles

Credit:
Getty
In April year-on-year sales were 10.4pc higher, also lifted by the impact of the new tax, which pulled forward sales in the first three months of last year. This caused a significant drop from April 2017 onwards, skewing comparisons.
So far this year, sales are down 6.8pc on the same point in 2017, with 1,079,049 cars sold in the first five months of 2018.
Mike Hawes, chief executive of trade body the Society of Motor Manufacturers and Traders, which collates the data, called the figures “encouraging and suggests the market is now starting to return to a more natural running rate”.
Analysis of the figures revealed that consumers fuelled the improvement, with retail sales up 10.1pc to 83,682.
In contrast, so-called “fleet” sales - to buyers such as car rental companies - slid 0.7pc to 103,490. Business sales fell 9.6pc to 5,477.
Car sales rev up but diesel demand crashes

Sales to "fleet buyers" - such as rental companies - edged down in the month

Credit:
Bloomberg
While the two months of sales rises - after 12 months of decline - were seen as positive for the car industry, commentators warned that the sector still faces a tough environment with Brexit uncertainty and questions over the future of diesel hitting demand.
"The car industry will take any positive signs right now, however modest, and two months of growth at least offers a glimmer of hope,” said Alex Buttle, director of car buying comparison website Motorway.co.uk. “But let's not kid ourselves - the industry is still facing a crisis, and it's far too early to be talking about a recovery.”
Examination of the figures revealed the collapse of diesel continued as drivers held off from buying cars powered by the fuel as confusion over Government policy towards it remains unclear.
Car sales rev up but diesel demand crashes

Diesel is suffering a crash in demand because of pollution concerns

Credit:
AFP
Sales of diesel fell by almost a quarter during May, taking its market share to 32.3pc, down from 43.8pc a year ago.
The Government believes diesel produces more nitrous oxide pollution than petrol. Car makers argue that the latest diesels are as clean as petrol and have the added benefit of producing less carbon dioxide.
Petrol sales by contrast rose 23.5pc in the month to 119,149, giving the fuel 61.8pc market share.
Alternatively fuelled vehicles (AFVs) such as electric and hybrid cars are also benefiting, with registrations up 36.1pc to 11,240 in May, giving the green vehicles a record 5.8pc slice of the market.
The overall recovery of car sales after the downturn is a “natural market correction”, according to Richard Jones, managing director of motor finance provider Black Horse.
He added that confusion over diesel could be easing, with the message starting to get through that the way to improve air quality is to get older cars off the road, and replace them with new ones, whether fuelled by petrol or diesel.
The SMMT said that the fastest way to achieve this “fleet renewal” was by giving certainty over policy towards diesel to the bulk buyers such as car hire businesses, which sell relatively new cars into the second hand market.
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