Brexit Blamed For Continued Slowdown In United Kingdom Auto Sales
Auto sales in the United Kingdom tumbled 9 percent in July 2017, a fourth consecutive year-over-year monthly decline for a market that had surged to record-high levels in the first-quarter of 2017.
A transitioning period for the Ford Fiesta — entering a new generation that is almost certainly not bound for North America — dropped the UK’s normal best-selling vehicle out of the top spot for a second consecutive month. Another Ford, the Focus, took over as the UK’s top-selling automobile as total sales at Ford, the UK’s top-selling brand, plunged 24 percent compared with July 2016.
Ford’s drop was by no means the only sharp decrease. Losses of more than 20 percent were also reported by Alfa Romeo, Citroën, Citroën’s DS brand, Fiat, Jeep, Peugeot, and Vauxhall.
Apparently, Brexit is to blame.
Britons narrowly voted to leave the European Union more than one year ago, on June 23, 2016. The British government didn’t actually ignite the process — by triggering Article 50 — for another nine months, on March 29, 2017.
Despite dire predictions for sudden economic collapse, auto sales continued to soar post-Brexit vote. In fact, 2016 ended as the highest-volume year in the history of the UK auto market with nearly 2.7 million sales.
Early 2017 continued the growth trend thanks in large part to March results that rose to an all-time monthly high of more than 562,000 sales.
But March’s results may have misrepresented the picture by pulling sales forward ahead of April tax changes. April sales then tumbled by a fifth. Uncertainty credited to a June general election may have led to a 9-percent auto sales decrease in May. June’s 5-percent decline ended a first-half that was still Britain’s second-best ever.
By July, however, the decreases were being felt across the board. Business, fleet (over half the market), and private sales all lost a significant number of sales in July. Diesel-powered vehicles — which represented 49 percent of UK auto sales in July 2016 — were down 20 percent and saw their market share fall to 43 percent as consumers begin to wonder where government diesel policies will land.
But according to the Society of Motor Manufacturers and Traders, economic uncertainty is the issue at play. “The fall in consumer and business confidence is having a knock on effect on demand in the new car market,” SMMT’s CEO Mike Hawes says, “and government must act quickly to provide concrete plans regarding Brexit.”
The good news in a declining market, according to the SMMT, is that a declining market increases competition while OEMs attempt to re-align production to demand. “It will be a good opportunity for consumers to get a great deal on their next car,” Hawes says.
Besides the harsh declines reported by Ford and other brands listed above, BMW, Honda, Infiniti, Jaguar, Kia, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Renault, Smart, Suzuki, and Volvo all sold fewer new vehicles in July 2017 than July 2016.
Top-selling models such as the Ford Fiesta, Vauxhall Astra, and Volkswagen Polo collectively stumbled to the tune of a 48-percent July drop.
[Image: BMW, GM]
Timothy Cain is a contributing analyst at The Truth About Cars and Autofocus.ca and the founder and former editor of GoodCarBadCar.net. Follow on Twitter @timcaincars.
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SMMT is right to be afraid... very afraid. Whatever the outcome, a trade deal can never be as good as the one the UK now has with the EU. Otherwise, why would the EU allow the UK the same arrangement if there's no downside to leaving, no price to pay? What Brits seem to forget is that the UK is the asking party. That's never a good bargaining position. Especially now that May's mandate has shrunk. Also the prospect of luring away car makers from the UK to the continent should not be underestimated.