Challenges ahead for the automotive industry
UK car sales fell in the past year for the first time since 2011 and some industry experts believe that the eventual diesel ban that was announced by the government in 2017 was one of the key factors in this.
In the last five years the automotive industry experienced rapid growth, but the past 12 months saw a 5.6% decline in sales compared to the previous year, with a total of 2.54 million new vehicles sold across the country.
Diesel car sales suffered the most, dropping 17% in 2017 and the industry’s trade body is predicting another disappointing year ahead with an additional 5-7% fall in sales.
2017 was described as ‘very volatile’ by SMMT’s chief executive, Mike Hawes, with total car sales at a record high in March but plummeting by 13.9% in December. He blamed the industry’s performance on the fall in business and consumer confidence in the wider UK economy and the uncertainty of diesel cars. Despite this, Mr Hawes said: "We need to put it into context. This was still the third best year in a decade and the sixth best ever."
Last year, the government announced its intentions to ban all petrol and diesel cars from 2040 to reduce the levels of nitrogen oxide, which currently poses the largest environmental risk to public health in the country.
Additionally, the November Budget saw the introduction of a levy on new diesel cars which failed to meet the current emission standards. This had significant consequences for the sector in the following month with demand for diesel cars declining and sales plummeting by 31%.
It is unsurprising that Brexit has also had a negative impact on car sales with the number of people willing to purchase expensive goods falling. In 2017, the automotive industry was openly critical over post-Brexit tariffs, claiming that it would result in the fall in car sales and potentially put people out of work.
As the demand for diesel and petrol cars declines, the industry is now facing a higher demand for electric and hybrid vehicles with sales rising by 34.8% to almost 120,000 in 2017. However, considering electric vehicles have been dubbed as the future of motor travel, the number of sales that they account for is still relatively small.
