new car sales

Why are New Car Sales Dropping?

This week, we again heard that for the 5th consecutive month a row, New Car Sales are down. In August, this comes as no real surprise because traditionally, as kids and families enjoy holidays and a month before new registrations come out, it’s quite common to have a flat month. But 5 months in a row?

Before we look at Automotive related possibilities for the drop, we need to consider the economic, environmental and political. The ‘elephant in the room’, is of course Brexit. Brexit seems to be the main cause of anything that ‘goes bad’, but some analysts are suggesting that uncertainty regarding the future of the U.K within Europe is at least partly to blame for people not digging into their pockets to invest in luxury products when perhaps historically, they may have.

The other noticable headline item is regarding diesel driven vehicles. The VW scandal didn’t just affect VW cars of course, and with the U.K government now making it’s displeasure of diesel driven cars quite apparant, it’s probably no coincidence that the slow down of new diesel car purchases is at 3 x the rate of petrol driven cars this last month. One could also argue that optimists are holding out for a ‘scrappage’ scheme to be introduced for diesel vehicles. Whether this will even occur is unknown, but the last government scrappage scheme did certainly enable, and empower, many car owners who perhaps wouldn’t have been interested otherwise, in trading in their ‘polluter’ for something fresh and new.

And then there is the economic. With inflation gradually increasing recently and with pay caps on public sector (and other) industry jobs, coupled with increased prices in shops for food, people have less cash in their pocket than they may like before going out and investing in a brand new car. The government’s earlier political announcement of halting all petrol and diesel driven car sales by 2040 may also have helped create the ‘perfect storm’ of economic and political reasons for some people to defer a new car purchase, even if 2040 is a long way off.

The optimists amongst us however would like to think it could be for positive reasons. With vehicles nowadays having longer service gaps, and cars having all the gizmos as standard, that a few years ago we were paying for as extras, many of us may be choosing to keep hold of our slightly older cars for a bit longer. Because we love driving them.

We’ve no doubt that we’ll soon see car sales rising again, and perhaps even as early as September (this month) as new registrations are released and as the kids go back to school and summer holidays fade as a distant memory. But with so many geo-political issues going on at the moment, we reckon it could be a bumpy ride for the next year or two by way of new car sales…