Why slowing car sales could be good news
New care sales in the UK fell by 12.2% in October 2017, according to the latest figures released by the Society of Motor Manufacturers and Traders. In fact sales are on course for the first annual decline since 2011, and the SMMT forecasts that the decline will continue into 2018 before levelling out in 2019.
Reasons for this trend can be summed up as a triple whammy:
• Declining economic confidence, with uncertainty around Brexit making people reluctant to make big ticket purchases
• Diesel vehicle sales collapsing (by 30% last month alone) following the scandal over rigged emission tests
• The falling value of the pound, making it difficult for the industry to continue with the discounts and offers that were previously fuelling the new car market
The recent rise in the Bank of England interest rate (the first for over ten years) is only likely to make things worse. 86% of all cars are bought on credit, and suddenly credit is less attractive.
So what’s the good news?
There’s some cause for long-term optimism amid the gloom. For a start, sales of petrol fuelled cars actually rose in October 2017, and there was an even bigger rise for electric and hybrid cars – up by just under 37%. People still want to get behind the wheel.
And at least once influential industry voice is looking at the decline in new vehicle sales and saying ‘about time too’. Quoted in The Guardian (6 November 2017) Richard Jones, managing director of Black Horse, the motor finance division of Lloyds Banking Group, said that “In the longer term this correction in sales is positive for the market.”
His point is that the fall in new car sales will help the car market as a whole to become more sustainable following the recent boom years. That’s because there was a danger of a glut of new cars putting big dents in used car values.
So we can look forward to a better balance of new and used cars on our roads in the future. And of course more older vehicles around means more business for auto repair and refinishing businesses.