Business

UK diesel car sales fall by 25% in January

Cars in front of union jack flag Image copyright Getty Images

Sales of new diesel cars fell by 25% in January with the industry blaming "confusion" over government policy.

Diesel sales were 25.6% lower than in January 2017, dragging overall sales down 6.3%, an industry body reported.

The Society for Motor Manufacturers and Traders said confusion over government policy was causing buyers to hesitate.

Diesels have been the focus of air quality concerns, prompting speculation that owners could face higher taxes or limits on where they can be used.

The government has stated a long-term goal to ban the sale of new cars running solely on petrol or diesel by 2040.

In November's budget, the government announced customers buying new diesel cars will face a one-off tax increase in April, unless the vehicles meet a higher standard on emissions. Company car tax for diesels was also increased.

London has already introduced a higher congestion charge for higher polluting vehicles, and other UK cities including Oxford have discussed limiting their access to city centres.

The Society for Motor Manufacturers and Traders (SMMT) said replacing older cars with new diesels would still reduce pollution and emissions as they are cleaner than older vehicles.

The SMMT said demand for cars that run on petrol was 8.5% higher this January than a year earlier, but that positive move was offset by the steep decline in demand for diesels, which account for around a third of the market.

Sales of "alternatively fuelled vehicles" including electric cars rose 23.9%, but they still account for only 5.5% of the market.

SUVs were the only type of vehicle to see growth, with demand up 6.6%. SUVs accounted for a fifth of all new car registrations.

"The ongoing and substantial decline in new diesel car registrations is concerning, particularly since the evidence indicates consumers and businesses are not switching into alternative technologies, but keeping their older cars running," SMMT chief executive Mike Hawes said.

"Given fleet renewal is the fastest way to improve air quality and reduce CO2, we need government policy to encourage take up of the latest advanced low emission diesels as, for many drivers, they remain the right choice economically and environmentally," he added.

New car sales overall fell by 5.7% in 2017. But annual sales were still higher than in every year during 2007-2014.

Howard Archer, chief economic adviser to the EY Item Club said that January, representing the 10th successive month of declining car sales, pointed to "a serious loss of momentum in the sector". Sales declined even more sharply in October, November and December.

He said the government's environmental strategy was only part of the explanation.

"Even allowing for uncertainty over government policy on diesel cars affecting fleet sales, it appears that that businesses have become more reluctant to replace or add to their fleets amid a highly uncertain economic and political outlook."

More on this story