New UK car registrations for October fell by 6.74% year on year, and by 2.85% over the year to date. Consumer confidence for October fell to -14, undermined by economic, political and Brexit uncertainties. Private registrations posted the largest decline in the market, declining by 13.2% over the month of October, while fleet demand remains stable. Private new vehicle sales year to date were weak at 3.2% while fleet year to date remained broadly flat at 0.1%.

Year on Year Growth (%) New Vehicles Registrations (source SMMT)

Consumer confidence remains low level at -14, undermined by ongoing concerns over Brexit and now a general election on 12 December. 

UK Consumer Confidence Index (source GfK)

Registration of new diesel cars continued to decline and fell for the 31 months down -28.3%; petrol also declined, falling by 3.2% in October. Market share for diesel was at 24.2% in October 2019 compared with 31.5% in October 2018. This demonstrates consumers’ continuing shift away from diesel. Consumers are also switching their preferences towards alternative fuel vehicles, with Battery Electric Vehicles increasing by 151.8% in October 2019. Total alternative fuel vehicles’ market share was 13.4% a significant rise from market share of 8.3% in October 2018, and indicating is an increasing trend towards alternatives to traditional diesel and petrol engine vehicles.

Market Share By Fuel Type  - Monthly (source SMMT)

The weak market and continued rising costs continue to create headwinds for the UK’s automotive sector – both upstream and downstream – and we believe this will continue into 2020. Compounding the naturally difficult trading conditions in the underlying market and general cost increases, there are also risks posed by changes in emissions standards. The market has already been affected by Worldwide Harmonised Light Vehicle Test Procedure (WLTP) and Real Driving Emissions (RDE), and new emissions targets will be introduced in 2020 and fully implemented in 2021. From 2021, the EU fleet-wide average emissions target for new cars will be 95g CO2/ km. Furthermore, the FCA is casting its eye over the automotive finance market with its recent publication of the motor finance discretionary commission models and consumer credit commission disclosure consultation paper, which addresses how consumers are being disadvantaged in the motor finance market. Measures include banning commission models that can incentivise brokers (including motor dealers) to increase customers’ interest rates, and implementing minor changes to clarify aspects of the FCA commission disclosure rules and guidance to give customers more relevant information. This will continue to generate uncertainty and cost pressures on the automotive industry over coming months, and is likely to further erode the industry’s already thin profit margins.

New Vehicle Registrations by Brand (source SMMT)