Brexit Seems to Have Really Screwed Up Britain's Car Market
While some of Europe saw modest auto sale gains through the first nine months of 2017, the region has mirrored North America’s decline in deliveries since the end of the summer. The United States saw eight consecutive months of declining sales this year, with a positive bump in September and better than expected volume in Canada.
Europe, meanwhile, saw the inverse. Passenger car registrations fell 2 percent year-over-year to roughly 1.43 million deliveries in September, despite August seeing a 5.6-percent improvement. Overall, 2017 has the makings of a unsatisfactory sales year for both regions. But Europe seemed to be doing alright before the U.K. suddenly stopped buying cars.
British registrations took a massive nosedive after Brexit. By September, it represented a monthly decline of 9.3 percent, compared to Germany’s 3.3 percent slide. Even though the rest of the continent saw a gain in sales, having Europe’s two largest markets lagging guaranteed the net loss.
The U.K.’s decline represent sixth straight months of dwindling deliveries. Bloomberg attributes the fumble to a weak pound and unsuccessful Brexit negotiations. In fact, trade deals have been idled since the British Chambers of Commerce downgraded its medium-term economic growth outlook in early September.
Still, we shouldn’t attribute Britain’s lackluster sales performance entirely to Brexit. Shorter average commuter times within the United Kingdom have made ride-hailing apps like Uber and Lyft exceedingly popular. The relatively recent PCP car loan trend also appears to have plateaued and analysts are becoming fearful that it has created a dangerous bubble within the automotive industry — akin to what took place in the housing market during the Great Recession. British household indebtedness is also already extremely high and average household savings is virtually nonexistent.
Combine that with governmental promises that internal combustion vehicles will be banned by 2040, fairly high auto taxation rates (compared to the U.S.), a market hampered by right-hand drive models that cannot be sold in other parts of Europe while also leaving consumers with fewer options, and the United Kingdom doesn’t really look like the greatest place to own a car.
While other countries have promised similar regulatory measures and already implement fairly aggressive taxes on automobile ownership, the U.K. seems to be the one suffering the most. As a result, PSA Group said on Monday it has decided to eliminate 400 jobs at Vauxhall’s Ellesmere Port facility in Britain to cope with declining sales.
Of course, Vauxhall has problems that extend beyond the U.K. But the region’s sales slump is hurting other automakers popular among British consumers. New vehicle deliveries from Ford Motor Co., the U.K.’s best-selling brand, fell 13 points across Europe last month.
For the whole of the year, U.K. sales down 3.9 percent against 2016’s figures through September. The most noticeable gap comes from diesel sales. According to SMMT vehicle registration data, diesel-powered vehicles saw 21.7 percent fewer deliveries in September and a 13.7-point loss for the year so far.
No other segment has bothered to fill that void. Sales for all vehicle types are down within Britain this year. The only exception is alternative fuel vehicles — which saw massive gains in 2017. Sadly, that 4.6-percent market share isn’t growing fast enough patch the gaping hole left by internal combustion models.
Consumer advocate tracking industry trends and regulations. Before joining TTAC, Matt spent a decade working for marketing and research firms in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Since adding automotive writing to his repertoire, he has become an ardent supporter of the right-to-repair movement, discussed the status of the automotive sector on national broadcasts, participated in a few amateur rallying events, and driven more rental cars than anyone should ever have to. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and learned to drive by twelve. Alleged to be contrarian, Matt claims to prefer understeer and motorcycles.
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Brexit. The worse populist decision by any politican this Century. Putting aside, stagnant incomes, mixed with a depreciating currency, along with the expected inflationary pressures, the UK's auto manufacturer's are facing a declining export market. The EU is the UK's biggest market by far and it will shrink substantially. This doesn't factor in the declining financial sector that will move offshore. The Brexit supporters deserve ehat's coming yheir way, just like the supporters of the dismantling of NAFTA.
"a market hampered by right-hand drive models that cannot be sold in other parts of Europe while also leaving consumers with fewer options" I truly can't comprehend why there are still countries that stick to driving on the left. Back in the 1960's-70's when several countries switched to driving on the right, ALL of them should have done so. Right-hand-drive is unnatural. I realize this opinion is going to stir up a lot of hate from those who think driving on the left is better. So be it...