It’s been reported that 2018 is going to be a rough year for new car sales in the UK, with a drop of 5.5% expected to happen. The report, carried out by ratings agency Moody’s, pointed towards Brexit uncertainty and the increased price of imported cars. In 2016, new car sales grew by 2.7 million, while 2017 saw a 5.7% decrease because of customers buying fewer diesel vehicles. According to Moody’s, the UK will only see around 2.4 million new car registrations in 2018, a figure that contrasts sharply with European sales.
Europe is going through a car sales boom, with France, Italy, Germany and Spain all expected to show signs of expansion. France is expected to increase by 2.8%, Italy by 2.5%, Germany by 4% and Spain by 4.7%.
Matthias Hellstern, Corporate finance managing director at Moody’s has give his opinion on the report. “The UK market will be the worst performer compared to all other major economics in Europe, and even worse, the only one that is declining. We think the price of imported cars might have gone up because of the weak pound, which has an effect on demand. But there is also the uncertainty with regards to Brexit which holds people back from buying new cars.”
Financial consultants PwC have said UK economic growth is likely to have a modest future because of “continued subdued real consumer spending growth.” A representative from Fathom Consulting, Joanna Davies said “we continue to believe that the risk of a consumer-led recession is high, with uncertainty about the Brexit process threatening a sharp increase in precautionary saving from abnormally low levels.”
When looking at the UK economy as a whole, there has been positive signs. For example, the Office for Budgetary Responsibility (OBR) revised its growth forecast to 1.5% for 2018, up from the original 1.4% predicted in November 2017. The OBR also mentioned inflation would fall by 2% by the end of the year.
The statistics for new car registrations is an example of the fluctuation within the industry that has become common since people started moving away from diesel cars. I’ll be interesting to see what the future holds for the car industry, especially after Brexit negotiations have been settled.
