LONDON (ShareCast) - (ShareCast News) - New car sales shifted sharply into reverse gear in April after the record previous month when drivers rushed to buy before the imposition of the new vehicle excise duty.
The number of new cars driven off forecourts last month collapsed 19.8% to 152,076 compared the April last year, the Society of Motor Manufacturers and Traders said.

This followed record sales of 562,337 in the key month of March, when not only was demand driven up by number plate changes but also the VED changes, which followed a 0.3% year-on-year dip in February and a 2.9% gain in January.

Car demand fell across all categories, with registrations by private buyers down 28.4%, businesses down 21% and large fleets falling 12.3%.

Not only were petrol and diesel sales down, but alternatively fuelled vehicle registrations declined for the first time in 47 months, albeit by a marginal 1.3%.

But due to March's strong performance, total car sales so far in 2017 are still up 1.1% year-on-year.

On top of the rush to register new cars and avoid VED tax rises before the end of March, new registrations were also hit by fewer selling days due to the later Easter, said SMMT chief executive Mike Hawes.

"It's important to note that the market remains at record levels as customers still see many benefits in purchasing a new car. We therefore expect demand to stabilise over the year as the turbulence created by these tax changes decreases."

While there was plenty of context to excuse the fall, said economist Howard Archer at IHS Markit, but April's considerable drop in sales suggested the record March performance "could well have been an element of a last hurrah in March's record car sales performance".

"Nevertheless, the extent of April's drop reinforces belief that the car sector is going to find life ever more challenging in the UK over the coming months," he added.

"And it is notable that it private car sales that saw the biggest retrenchment in April and have been the only sector to see sales fall year-on-year over the first four months of 2017."

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