Brexit uncertainty and emissions policy sees the UK’s annual car sales at the lowest since 2013

Car sales in Britain hit a six-year low in 2019 as consumer confidence fell primarily due to rising restrictions on diesel-run vehicles as well as the uncertainty stirred by the new complications regarding Brexit.  

2019 marked the year of rising wages and low unemployment in the United Kingdom. However, households still remained cautious of their spending in 2019 as evident by the aforementioned data released on Monday. The UK is the second-largest market for new cars in Europe.  

New Car Registrations Fall For The Third Consecutive Year In The UK

As per the Society of Motors Manufacturers and Traders (SMMT), the UK recorded 2.31 million new car registrations that marked a 2% annual drop. 2019 was the third year in a row that annual car sales printed a decline, following record-high sales (2.69 million) in 2016.

According to the experts, Volkswagen’s recent scandal circling environmentally hazardous emissions weighed on consumer’s confidence in buying diesel vehicles. Plans of broadening the restrictions on diesel vehicles further contributed to keeping the annual car sales at a six-year low.

The report further highlights that sales hiked by 4% in the UK in December as compared to the same month last year. The relative increase, however, was largely attributed to a limited stock of a range of vehicles towards the end of 2018 as many of the models were put through extensive emissions tests.

Brexit Continues To Be A Deciding Factor For The Future Of The Industry

SMMT Chief Executive Hawes sees Brexit as a major concern for UK’s automobile industry. In an event that PM Johnson fails to strike a trade deal with the European Union by the current deadline for the transition period of December 2020, 2021 is likely to see a 10% increase on tariffs on import/export of cars in the UK. Hawes further added that the higher tariffs will exponentially increase the production cost for car manufacturers that have already started to pull the investors out of the market.

Even after Brexit, Britain is expected to take up the existing EU plan that imposes significant fines on manufacturers if the per kilometer emission of carbon dioxide in their vehicles goes above 95 grams. The strict policy that goes into effect in 2021is likely to further weigh on the car industry.

UK’s consumers have shifted preference to bigger cars that consequently resulted in a higher per kilometer carbon dioxide emission of 127.9 grams in 2019. This marks a 2.7% increase as compared to that of 2018. The EU average for 2018 was capped at 120.4 grams.  

Hawes also suggested that the government should offer greater subsidies on electric vehicles in order to contain the cost for consumers as well as the industry and give a boost to the UK’s annual car sales. Electric vehicles made up less than 2% of the total sales in 2019 in the UK.