Expert Blog

2017's car sales: some necessary perspective

20180108_2017's car sales: some necessary perspective [1]

The new year brings us a sobering statistic: registrations of new cars fell by 5.7% in 2017, when compared to the previous year. The Society of Motor Manufacturers and Traders says that this decline is due to falling consumer and business confidence, as a result of wider economic uncertainty, and this claim is supported by the underlying numbers. As our graph shows, registrations of new cars to private consumers fell by 6.8%, those to fleets fell by 4.5%, and those directly to businesses fell by 7.4%:

However, some perspective is needed. For starters, these declines are not unexpected – Hitachi Capital Vehicle Solutions’ quarterly updates were tracking them for most of last year. And, for seconds, it ought to be remembered that car registrations are still more buoyant than they were in the past. The total number of cars registered in 2017 (2,540,617) may have been lower than in 2016 (2,692,786) and 2015 (2,633,503), but it is still higher than any of the eight years before that. Which is to say, 2017’s total is the third biggest of the last decade.  

In this light, last year should be regarded more as an adjustment than a cause for alarm. Record levels of growth – which are what the car industry has been achieving since 2011 – cannot continue indefinitely. There was always going to come a time when sales slowed.   

Besides, there are some upwards trends within latest the SMMT statistics. As our second graph shows, sales of alternatively-fuelled cars continued to rise last year. 119,820 were registered in 2017, which is 34.8% higher than in 2016. They now account for 4.7% of the entire market, which is their highest share ever.

The rise of alternatively-fuelled cars has come, in part, at the expense of diesel ones. The number of diesel registrations fell by 17.1% last year, bringing their overall share to 41.9%, the lowest it has been since 2009. Meanwhile, petrol registrations increased by 2.8%, bringing their share to 53.4%, the highest it has been since 2009. As the SMMT’s Mike Hawes puts it, ‘confusing anti-diesel messages have caused many to hesitate before buying a new low emission diesel car’.

It’s the shift away from diesel and towards petrol that probably explains another SMMT finding that has been published today: the average carbon dioxide emissions of new cars also rose (by 0.8%) in 2017, the first such annual rise for twenty years.

Which brings us to one of the great questions hovering over 2018. As our recent Future of Fuel report suggests, the rise of alternatively-fuelled cars is surely going to continue throughout the year, as will the development of cleaner petrol and diesel models, but will this be enough to bring emissions down again? We’re hopeful that it will be.  

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