UK car industry struggles amid Brexit uncertainty

British new car sales grew at the slowest rate of any major EU country in September, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

Car sales rose 22 per cent in Germany, 18 per cent in Spain, 17 per cent in France, and 13 per cent in Italy during September, but continued economic and political uncertainty meant the UK only saw growth of a meagre 1.3 per cent over the same period.

September is traditionally a strong sales month for new cars thanks to the introduction of new numberplates. But after a poor previous nine months that saw sales in the UK decline by 2.5 per cent to 1.86 million in part thanks to new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) regulations, manufacturers had hoped UK sales would rebound with significant double-digit growth in September as they did on the continent.

SMMT chief executive Mike Hawes commented: “September’s modest growth belies the ongoing downward trend we’ve seen over the past 30 months. We expected to see a more significant increase in September, similar to those seen in France, Germany, Italy and Spain, given the negative effect WLTP had on all European markets last year.

“Instead, consumer confidence is being undermined by political and economic uncertainty. We need to restore stability to the market, which means avoiding a ‘no deal’ Brexit and, moreover, agreeing a future relationship with the EU that avoids tariffs and barriers that could increase prices and reduce buyer choice.”

A recent SMMT survey shows the scale of the problems Brexit uncertainty has caused the automotive industry, with a third of firms already cutting jobs and more than 80 per cent fearful about damage to their future business prospects. SMMT’s 2019 UK Automotive Trade Report calculated that a ‘no deal’ Brexit would wipe £50,000 a minute off the automotive sector’s economic contribution.

Alongside Brexit, the car retail sector sector is also facing threats from the growth of online sales and ride-sharing apps impacting levels of car ownership. However, dealerships are adapting with Peter Vardy, which holds retail franchises for BMW, Jaguar Land Rover, Porsche and Vauxhall, recently telling Motortrader that it “intends to sell half of its vehicles online by 2023, with a target of 60% of all service bookings coming through online channels in the same year.”

The broader automotive industry is the UK’s biggest exporter of goods around the world, supports 168,000 jobs, and delivers £18.6bn to the public purse. At a time when new technologies are already putting pressure on the industry, a “no deal” Brexit would risk permanently destroying one of the UK’s most valuable economic assets.

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