Researchers in US are developing new technology for fast-charging batteries. Read more: https://t.co/neAltKTMhq
The UK passenger car market went into retreat again in October, falling by 6.7% year on year
The UK passenger car market went into retreat again in October, according to the latest data published by the Society of Motor Manufacturers and Traders (SMMT). Registrations reached 143,251 units during the month, a decline of 6.7% y/y. The fall was largely the result of a 13.2% y/y decline in private registrations to 60,083 units, compounded by a 30.3% y/y drop in registrations among business customers to 3,256 units. This was partly offset, however, by a 0.3% y/y improvement in fleet registrations to 79,912 units. Last month's performance exacerbated the year-to-date (YTD) decline: registrations shrank by 2.9% y/y during the first 10 months of 2019 to 2,005,522 units.
The data released for October show that the shift away from diesel continued during the month. Registrations of this fuel type fell by 28.3% y/y to 34,666 units, to take just 24.2% of the market. By contrast, gasoline (petrol) sales fell by "only" 3.2% y/y to 89,371 units, and this fuel type now has a market share of 62.4%. There is growing demand for electrified alternatives. The increased availability of mild-hybrid electric vehicle (MHEV) technology has boosted sales of such vehicles: registrations of gasoline MHEVs grew by 8.7% y/y to 1,732 units last month, while registrations of diesel MHEVs jumped 378.1% y/y to 3,251 units. Traditional hybrid powertrains had a strong month, posting a gain of 28.9% y/y to 7,950 units. New models helped to boost sales of battery electric vehicles (BEVs) during the month by 151.8% y/y to 3,162 units, while the plug-in hybrid category has started to shrug off the changes to the UK government's Plug-in Car Grant (PiCG) that were enacted from October 2018, although it still slid by 1.7% y/y to 3,119 units last month.
Outlook and implications
Like many EU markets, the UK passenger car market has been hit to some extent by the shift from NEDC to WLTP testing at the beginning of September 2018. However, unlike the majority of EU markets last month, the UK market was unable to grow from its low base of comparison (albeit more modest than for some markets), and in fact found itself in an even worse position. Part of the reason for this seemed to be consumer uncertainty, reflected by the decline in the number of private customers entering the market in October. There are a number of causes of this uncertainty. From a product perspective, there are increasingly fewer reasons to consider buying a new diesel car - despite the introduction of new technologies - particularly as it appears as though cities are looking to clamp down on their usage in certain areas . At the same time, there have been political and Brexit-related concerns, especially during the past month. Despite the agreement of a revised deal with the EU over the UK's departure from the bloc, a 31 October 2019 exit date has now been extended until 31 January 2020. In the interim, a general election has been called for 12 December, although it is difficult to know whether this will provide any greater clarity, particularly as some of the smaller political parties may end up having some influence over the final outcome.
For now, IHS Markit expects the UK passenger car market to register around 2.29 million units in 2019, a decline of 3.1% y/y and a 15% drop compared with the recent peak reached during 2016. We expect the market to bottom out during 2020 at almost 2.23 million units before slowly improving again in 2021. However, our forecast assumes that the UK will eventually ratify an EU withdrawal agreement, launching a transition period during which it will temporarily remain part of the trading bloc. Beyond this transition period, we assume a free-trade arrangement for goods and access to the single market for some UK services based on equivalence.
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