March hangover or a shift in consumer demand for new cars?

Kevin Lamb, automotive specialist at RSM, said:

‘Following the 19.8 per cent fall in registrations in April 2017 compared with the previous year, new car registrations in May 2017 were 8.5 per cent behind the same month last year.’

‘While the April reduction could be attributed, in part, to brought forward March activity to avoid the changes to vehicle tax rates, the recent fall raises the question of underlying consumer demand. A total of 186,265 cars were registered in May 2017 compared to 203,585 in May 2016.

‘Year to date registrations have now fallen behind last year, with 0.6 per cent fewer cars being registered in the first five months of the year at 1,158, 357. This suggests that the gains made in March have been reversed. 

‘However, alternative fuel vehicles continue to outperform other classes, recording a 46.7 per cent increase in registrations, bringing year to date market share for AFVs to 4.1 per cent. Diesel car registrations continue to suffer with a 6.3 per cent reduction in market share in May as the prospect of government measures to restrict their use loom closer.

‘The level of self-registration activity to meet March targets may also have contributed to the registration activity in May alongside declines in consumer confidence as UK inflation begins to impact on disposable income. However, demand is likely to be supported by low interest rates and buyers seeking to avoid significant price increases should trade tariffs be applied following the UK’s departure from the EU.

‘Consideration must be given to whether or not the May results are a hangover from the excesses of March or an indicator of future registration activity. The results for June, following the UK general election will bring some clarity to that question.’