LONDON (ShareCast) - (ShareCast News) - UK new car sales fell steeply in the historically strong month of September for the first time in six years to record their sixth monthly decline in a row.
In September there were 426,170 new vehicles registered, according the Society of Motor Manufacturers and Traders (SMMT), a 9.3% year-on-year fall in what is normally one of the two most important months due to number plates changes.

Private new car sales fell 8.8% in September after drops of 9.9% in August and 6.8% in July, with this consumer facing section the weakest area for car sales in 2017, down 6.1% in the year to date compared to the overall 3.9% drop in car sales.

The SMMT attributed the drop to economic and political uncertainty, and confusion over air quality plans led to a fall in consumer confidence, while economists said the decline was not surprising given the softness in consumer spending this year.

Business, fleet and private sales all fell in September, respectively by 5.2%, 10.1% and 8.8%, indicating that companies are also reluctant to replace or add to their fleets amid weakened economic activity and the uncertain outlook.

Electric car sales continued their good momentum, with alternatively fuelled vehicle sales accelerating 41.0% in the month and 34.6% year-to-date, with nearly 95,000 leaving forecourts this year.

However, petrol car sales declined 1.2% diesel sales fell for the sixth consecutive month, skidding 21.7% lower in September.

"September is always a barometer of the health of the UK new car market so this decline will cause considerable concern," said SMMT chief executive Mike Hawes.

"Business and political uncertainty is reducing buyer confidence, with consumers and businesses more likely to delay big ticket purchases."

He said consumer confusion around government air quality plans "has not helped" sales, but he pointed out that all the new diesel and petrol models on the market will not face any bans or additional charges.

"Manufacturers' scrappage schemes are proving popular and such schemes are to be encouraged given fleet renewal is the best way to address environmental issues in our towns and cities."

Car sales are being hit by the inflation-driven squeeze on real incomes, making households reluctant to make major financial commitments, said economist Sam Tombs at Pantheon Macroeconomics.

But he estimated that in seasonally-adjusted terms registrations were 9.7% higher in the third quarter compared to the second, when sales had been hit by April's increase in Vehicle Excise Duty.

"On past form, the near-10% rise in registrations points to a 5.0% quarter-on-quarter rise in households' real spending on cars, which would boost growth in households' total spending by 0.17 percentage points. Growth in households' spending, therefore, likely will improve a little on Q2's 0.2% rate, although we expect continued weakness in investment and net trade to mean that GDP increases by just 0.3% in Q3.

"Meanwhile, the recent fall in consumers' confidence and the prospect of a further pickup in inflation and borrowing costs before the end of this year likely will mean that car sales revert to dragging on consumption growth in Q4."

Howard Archer at the ITEM Club said car sales are also likely to be hampered by mounting pressure to restrict car finance deals and unsecured consumer credit.

"The Bank of England has shown mounting concern over this and is keen for a more responsible approach to be adapted. This is magnified by concerns over the resale value of cars at the end of personal contract purchase (PCP) deals," he said.

After two successive quarters of decline in car sales, noted Alex Buttle of car buying comparison website Motorway, the UK's new car market is officially in recession.

"With Brexit fears likely to keep hampering consumer confidence in the short term, the new car market has a fight on its hands to recover. It feels like this combination of negative forces will keep kicking the market hard when it's already on the floor."

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE