Carmageddon in the UK: Auto Sales Plunge 12% in 2 Years, Diesels in Death Spiral. Consumers, Businesses, Fleets Cut Back

This is getting serious.

Sales of new passenger vehicles, as measured by registrations, dropped 5.5% in December from a year earlier in the UK, the second largest auto market in the EU, behind Germany. Sales in the full year of 2018 dropped 6.8%, “reflecting 12 months of turbulence,” and “the ongoing decline in consumer and business confidence,” according to the Society of Motor Manufacturers and Traders (SMMT).

But in 2017, sales had already dropped 5.7% from 2016; and over the two-year period, sales were down by 12%. This chart shows the year-over-year change in new vehicle registrations:

Sales fell for all three customer types: to consumers (-6.4%), to fleets (-7.3%), and to businesses (-6.4%). A lease counts as a registration because the leasing company buys the vehicle and leases it to the customer, at which point the vehicle is registered.

Sales in 2018 fell to 2.367 million new vehicles, as measured by registrations. This was the lowest level of sales in four years, and below 2014 sales (2.476 million):

And diesel sales have collapsed. In 2018, they plunged 29.6%, after having already plunged 17.1% in 2017. Since their peak in 2016 (1.29 million), diesels sales have dropped 42%, to just 750,165:

Demand fell across all vehicle categories except the “dual purpose” category (definition) which is close to SUVs in the US. Sales in that category jumped by 9.1% in 2018 to reach a market share of 21.1%.

Sales of superminis fell by 2.4% and sales of lower medium cars plunged by 9.4%. But small vehicles remain the bestsellers in the UK, unlike the US, whose sales are dominated by compact SUVs, pickups, and SUVs. According to the SMNT, smaller cars have a combined market share of 58.7%.

Below are the best sellers in the UK (table via SMMT). Note the #1 bestseller in the UK, the Ford Fiesta. In the US, Fiesta sales surged nearly 12% in 2018 (which is quite something given that overall car sales, unlike truck sales, have been plunging for years). But Fiesta sales in the US were tiny, just 51,730 vehicles in a market that is over seven times the size of the UK market; and they accounted for only 2.1% of Ford’s total US sales:

There was strong growth in sales of battery-electric vehicles (EVs) in 2018 (+13.8%) and plug-in hybrid electric vehicles (+24.9%), but their combined market share was still only around 2.5%, and they just didn’t make enough difference; and there was strong growth in sales of gasoline powered vehicles (+8.7%).

This shows that many individuals, fleets, and businesses that were driving an older diesel vehicle replaced it with a vehicle with a different powertrain. But this switch was not enough to make up for the plunge in diesel sales. This brings up a more generic economic problem: It seems consumers and businesses have been backing off replacing their vehicles over the past two years, and are keeping their existing rides longer, which is the bane in the auto industry.

There are plenty of reasons for the steep decline in the UK auto market. This includes consumer aversion to diesels in Europe generally, and tepid consumer and business demand more broadly in the UK – likely a mix consisting of the uncertainty surrounding Brexit, economic cycles with their ups and downs, and broader disaffection among consumers and businesses for spending money on cars.

But the UK is not unique in the world – and blaming the uncertainty around Brexit exclusively will not do. Auto sales in the largest market in the world, China, ran into a buzz saw in 2018. The second largest market, the US, peaked in 2016, and sales have been tapering off. In Germany, registrations dropped toward the end of 2018, driven by declining commercial sales, and year-total registrations edged down 0.2%. So clearly, there is a broader theme: Global demand for new vehicles just isn’t what it used to be – and this is another piece of the puzzle.

For the three biggest automakers in the US — GM, Ford, and Toyota — 2018 was the third relentless down-year in a row. For them peak sales occurred in 2015. Read..Carmageddon for GM, Ford & Toyota: 3rd Down-Year in a Row. Industry Sales Below 2015. Hyundai-Kia Drop 11% in 2 Years. BMW & Mercedes-Benz Fizzle

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  45 comments for “Carmageddon in the UK: Auto Sales Plunge 12% in 2 Years, Diesels in Death Spiral. Consumers, Businesses, Fleets Cut Back

  1. Dave Mac says:

    You can’t have solid growth forever, no matter what economists say.

    Those deluded enough to claim otherwise should look at Japan.

  2. MF says:

    During the GFC, automakers turned to China for growth. Where will they go this time?

    The diesel crash is interesting. It coincides with the VW scandal. I wonder if most buyers thought they were driving “green” vehicles before the story broke. A friend was leasing a Jetta diesel at the time, and he traded it early and rolled all the negative equity into a — get this — Jeep Cherokee. He honestly believed he was driving a “green” car at the time and felt betrayed. His is just one of those data points where buyers have abandoned “cars” and switched to “SUVs”.

    • char says:

      There are fears (some would say hopes) that diesels will be banned inside town centers. Owning a vehicle that you can’t use to drive where you want to go is maybe not the best allocation of money. This has also an effect on the resale value of cars which make diesels more expensive to buy/lease

    • chris sheldrick says:

      There was a time when people thought the world was flat..these day’s we know its flat…..or is it.

  3. Rowen says:

    demographics demographics demographics

    How soon before the first world adopts Japan’s safety protocols to force consumers to replace cars every couple of years?

  4. Andy S says:

    I wouldn’t say that ‘dual purpose’ vehicles are close to SUVs.
    Known as ‘car derived vans’ they can be cars with no rear seats and the rear panel is all one pressing instead of a hole cut out for the window.
    Most of them seem to be cars with a larger cargo area and sliding side door.
    Nice to get a view on how bad it is over here.

  5. Wisdom Seeker says:

    The decline in diesel is larger than the overall decline. Gasoline and other powertrains are all growing despite the overall decline.

    So it seems like people were quicker to abandon diesel vehicles after the corporate scams were revealed, than they were to abandon, say, the giant banks after similar (or worse) scandals.

    Why is that? Does the auto industry have more genuine competition and options available to customers?

    Most people pay up more in fees and interest each year to the financial-services industry, than they spend on auto payments… the choice of which bankers to enrich matters just as much as which car to buy!

    • Old Engineer says:

      Wisdom Seeker,
      I don’t know about Europe but in the U.S. diesel drivers are required to subsidize the trucking industry through the higher road taxes imposed on diesel fuel than gasoline. This was done some time ago to reduce the registration cost burden (based on weight usually) on semi truck drivers. Farmers can get a refund but not farming drivers cannot.
      That has been a major impediment to the adoption of diesel in the U.S. and if this is the case in Europe it could also deter diesel sales.

    • Les Francis says:

      Diesel fuel in Europe has become a dirty word.
      NOX levels have increased sharply.
      Some cities have instituted diesel bans. Paris from 2020.
      Other cities in Europe and even London have either considered banning diesels or have already put in place timelines for phasing them out.

      Consequently this have caused second hand values of diesel engines cars to plummet.

      • Kaz Augustin says:

        And they were more expensive than petrol vehicles, to begin with, maybe to offset the slightly cheaper price per litre at the pump. Now it’s turning into A Really Bad Decision, esp. for all those Europeans who paid extra to buy their diesel vehicles in the past couple of years. Expect even more pain in this space.
        I predict West Europeans taking their dieselmobiles across the border to Central Europe and selling their newish 2nd hands there because, as everyone knows, West & Central Europeans don’t breathe the same air. /sarc (Those from Oz will remember a time when we could get secondhand Jap cars cheap because Japan was draconian when it came to how long a car could stay on the road.)

        • char says:

          The bad diesel emissions are only active on a very local scale so it is really true that Western and Central Europeans don’t breath the same air. Besides most wind comes from the West

  6. CoCosAB says:

    My gasoline powered vehicle is from 2002… I will never buy another car until this one falls to the ground.

    So… When buying cars turns into a simple fashion acquisition it’s natural that fashion sales drop when people have financial stress.

    As for the future, I’ve already wrote that:

    Unfortunately the TREND is here to stay!

    In European Communist Union the laws and regulations being approved by the scoundrels in the Central Committee are all pointing at a very minimal number of combustion engines vehicles circulating by 2050!

    China is also expanding electric PoS!

    Japan following!

    The BIG CAR MAKERS are all following the STATE SUBSIDIES…

    They are already adding extra taxes to DIESEL cars… After the DIESEL market starts to collapse they will shift taxes to GASOLINE cars. All this while giving public funds to buy electric/hydrogen PoS! So the HERDS of slaves will have NO CHOICE than to buy a E-PoS or H-PoS.

    It won’t make the World a CARBON FREE place (that’s just an illusion made up by the scoundrels.

    The BIG OIL has enough time to adjust to the market change… They will divert resources to E/H-production while maintaining the MONOPOLY in ALL THE OTHER STUFF we need OIL for.

    Sorry for the F word! (Will it pass the bip?)

  7. Steve clayton says:

    There’s just no point buying a new car in the UK, as soon as you buy one you lose 20% straight away. The second hand market I presume is holding up in the UK? The lease deals on new cars aren’t as good either. Might as well stick with my 59 Ford Focus paid off and run it into the ground. Regards Steve UK.

  8. MCH says:

    Not to worry, the Brits will power through this downturn and the upcoming Brexit with their well known pluck. Nothing can keep them down for long.

    Before you know it, they’ll be back to buying autos in volume again. Just have faith… hmm, how do I short VW again? Oh never mind, I’ll just short Ford.

    • Kaz Augustin says:

      Good luck with that propaganda. The Brits have never had “pluck” and the average Brit has always been skirting the edge of poverty. Always. Even colonialism didn’t help. Merely look at the capital outflows during the time of the Raj. There were no commensurate inflows into the British economy as a whole.

      In modern terms, TRILLIONS were extracted from India during colonialism. Where did they go? Did the average Brits manage to create their own moorish pagodas in their backyards as a result of all that extra cash, did middle-class Brits hire domestic servants by the bucketload, did the dental industry experience an exuberant upsurge? Hardly. They did it hard, right through from Raj to Industrial Revolution to WWII and beyond. The City of London, otoh, …

      • MD says:

        Ahhhh always with the teeth thing – how boringly predictable!

        All I can say is if you think Brits have bad teeth, that just shows you’ve been nowhere and seen nothing.

        Less time swallowing what the TV tells you, more time growing a spine and getting out in the world required…

      • MooMoo says:

        On the other hand, unlike most of the world, they developed a brilliant sense of humor.

        No German, Frenchman, Spanish or Italian can match the with of the British. It is what makes it such a great place to live, while the continent itself is boring beyond belief.

        • Cashboy says:

          British people have a great sense of humour (spelt the correct English way).
          However, Briton and all the EC for that matter is not a great place to live anymore.
          Most of my single business friends (the ones than can afford to) are retiring early and moving to Asia.

        • Bill says:

          That is probably because you cannot understand the jokes in German, French, Spanish or Italian! ;-)

      • IdahoPotato says:

        “In modern terms, TRILLIONS were extracted from India during colonialism. Where did they go?”

        How else do you maintain a horde of mooching Royals strutting around in their silly hats?

  9. Martin L Hoffmitz says:

    The average human, in a developed economy, is beset by “alligators” rising costs of taxes at all levels, “fees” costs of Education for kids, Health and Health related costs, food, energy – our wallets don’t lie.. Now a vehicle is a major expense, Cost, Finance, Depreciation.. Dual income family often needs two vehicles to get to and from… Eaten alive, sooner or later, we get tired of being nibbled to pieces, while the “system” tells us all is well, and getting better! :) – At some point, the wheels start to come off the Bus, or the minivan, as the case may be..

    • c smith says:

      “…sooner or later, we get tired of being nibbled to pieces…” And the globalists/greens have been the chief “nibblers” over the past decade. People are tired of paying for others virtue signaling. Brexit is exhibit A, and just maybe VW, Mercedes and BMW will get the message from the collapse in their British sales.

  10. Henry says:

    As wealth inequality grows, this will continue.

    The middle class and working class are getting squeezed. No pay raises, and jobs always at threat. Constantly told by governments that they have to pay the costs of the wars and deficits, so they face higher taxes and get less from the government. People are working longer hours and multiple jobs just to get by.

    In such a world, the notion that everybody can go buy a new car at the now exhorbinate prices is dying. The ones who do buy a new car are getting it on seven year payment plans. The answer is that people make their old cars last and if they do have to replace it they do so with a used car. The notion of ordinary people buying a new car is now buried next to Henry Ford’s grave.

  11. Gershon says:

    UK debt donkeys are tapped out paying for their exorbitantly-overpriced housing to go out and buy new cars.

  12. roddy6667 says:

    I don’t know the stats for the UK, but the middle class in the US now has the buying power it did in 1967–disposable income adjusted for inflation. This has a huge influence on what car to buy. What next? 144 month car loans?

  13. fjcruiserdxb says:

    Auto industry, memory chips and property markets all being seriously under attack all over the world. Early signs of a pending global recession ? The roaring stock market seems to think otherwise. Fundamentals do not lie though.

  14. Willy2 says:

    – As said many times before: The EUR and the USD have risen some 30% against the GBP since 2014/2015, making A LOT OF imports (think: oil and food) (much) more expensive. But at the same time british wages didn’t rise (enough) to compensate for the fallen GBP.

  15. Realist says:

    A combination of taxation of diesel veichles and the price of diesel at the pump might have something to do with the decline of popularity.

    At least where I live diesel cost about as the same as 95. And another thing, I have come across some sources that claim there is shortages of crude that can be refined into diesel. The much hyped shaleoil is too thin for this just to mention an example.

    • a citizen says:

      “And another thing, I have come across some sources that claim there is shortages of crude that can be refined into diesel.”

      Those sources would be incorrect. Shale oil is well suited for mid-distillates production.

  16. Howdy there says:

    Now if population growth were halted at the current 7.8 Billion – permanently.

    I wonder what would happen to the auto industry (well actually I don’t wonder, because it’s rather obvious)

  17. MD says:

    They’re not ‘sales’…90% of them are leases, handed back after 3 years to be exchanged for the next wizz-bang model to turn the neighbors green with envy. That’s why the SMMT reports them as ‘registrations’.

    Once everybody who’s got £150 PM spare to ‘buy’ a shiny new car to sit in a traffic jam has done so (no deposit required, and just stick the service costs on the credit card – no problem!), then of course growth will slow.

    …leaving the problem of course of what you’re going to do with all these 3-year old cars.

    • Peter says:

      I no longer see older cars on the road like I used to a decade or so ago.
      They are all new ones I now see, all I expect on PCP deals.

      Additionally the increasingly stringent annual MOT test is removing those which in previous year would still pass. They fail on bodywork rust and engine emissions.
      Additionally cars are becoming more like computers and more complex – your main ECU unit fails on your 10 year old car – and the car is probably scrap. Older cars in the past handed down to youngsters can no longer be self-maintained as they need diagnostic equipment and special tools: so no one wants them.

      Since you as Joe average are no long longer going to be buying and keeping the car for a long time as it now makes no sense to do so – they go for a PCP deal instead.

    • Wolf Richter says:


      You really need to understand this about a lease:

      A lease IS a sale involving a third party (in total 3 entities), as I explained in the article:

      1. Dealer (first entity) SELLS the vehicle to a leasing company (second entity). This is the SALE, after which the leasing company’s name is the documented owner of the vehicle.

      2. Leasing company LEASES the vehicle to the customer (third entity).

      Throughout the lease, the leasing company OWNS the vehicle. After the lease terminates 2-3 years later, vehicle is taken back to leasing company, which still owns the vehicle. It then sells the vehicle at auction to some dealer who puts it on the used car lot.

  18. HMG says:

    This is getting confusing.

    The balance between petrol and diesel is a variable factor that at the moment is drifting back in petrol’s favour.

    The key issue however is car sales in total. Add petrol and diesel together to get the overall picture and attach less significance to the two individual figures if you are considering the relevance of car sales to the economy.

    Having been in the motor trade for over 50 years I can state that all previous declines in car sales have coincided with a slump in house prices.

    This time the same is happening again.

    Car manufacturers and dealers are not represented in the UK Parliament and any lobbying is very low key. The UK £2000 minimum part exchange scheme was the only real help the UK Goverment gave the motor trade sector in the GFC.

    Unfortunately the beneficiaries of that scheme turned out to be Companies like Hyundai and Kia that could swiftly increase their imports of sub £10,000 cars much to the detriment of our balance of payment deficit. Most of the resulting extra
    Vehicle imports did not even come from the EU.

    Their is no easy fix to prevent the forthcoming recession.
    Just sit it out with some cash and look for bargains when the time comes.

  19. Chris says:

    There was a report out in the UK yesterday (on the BBC News site): “Excluding mortgages, average debt per household rose sharply in 2018 to a new peak of £15,385, up £886 in a year, the research says”.

    But that number isn’t the whole story. Old misers like me have no debt so we distort the average. And I know a lot of people like me. I’d love to see a more detailed breakdown of where the debt is.

    What is also apparent here is that the gap between the better-off and the less well-off is much wider than it used to be. On my daily walk I pass many, many houses with multiple recent Mercedes/Jaguar/Land Rover/BMW/Lexus on the drive. I suspect there’s a lot of debt parked on those driveways, and no burning necessity to upgrade.

    • Covey says:

      Speaking as another “old miser” I also do not do Debt and have been debt free for the last 20 years. It means I buy second hand cars instead of the new cars I used to buy, but the used cars of today have much more life in them than the cars of the 60’s and 70’s.

      I currently drive a Smart diesel which does 80+ mpg and has zero road tax. I bought the car which had been on a Smart lease, 3 years old and 5000 miles on the clock for half its original list price. I shall keep it until it falls apart as the second hand value of diesels in the UK went through the floor when the Government switched from “diesels are good” to the current campaign of vilification of anything to do with diesel.

      The Government recently increased taxes on new diesels and to show how Green its Ministers were, announced that all petrol and diesel vehicles would be banned from 2040.

      Jaguar Land Rover are currently suffering a marked drop in sales which many politicians blame on Brexit. As we have not left yet, it seems unlikely, and probably has a lot to do with the fact that 85% of JLR models are high end expensive diesel’s whose PX values have dropped like a stone and nobody wants to shell out more cash for a vehicle the Government wants to tax out of existence.

    • MC01 says:

      As a rule of thumb, look up what cars.

      “High net worth individuals” tend to buy the same cars: full size Range Rovers (preferably with a V8 engine) and Land Cruisers, large sedans, be them BMW, Jaguar, Lexus or Mercedes-Benz, and the more touring oriented Aston-Martin and Ferrari models are also favorites. The more privacy-oriented may also own a high end Toyota Prius (the one with solar panels on the roof) as a daily driver.
      “Low net worth individuals” tend to buy or lease the same cars, mostly large SUV’s (as opposed to off-road vehicles like the Land Cruiser) with those from Jaguar-Land Rover being huge favorites. Smaller BMW models, especially the 1-, 2-, X1 and X2 series, are also favorites, albeit sales of these four particular series seem to have fallen off a cliff in 2018 throughout Europe.

      Also most of the former have dedicated garages: parking on the driveway or outside the house is so Belgravia/Chelsea circa 2006 and we don’t like that kind of upstarts in this borough.

  20. Cynic says:

    The UK economy is disintegrating from the bottom up, and the process is most likely not reversible.

    Possibly one of the weakest and most vulnerable of the major economies, even without all the Brexit nonsense.

    • HMG says:

      Yes, it’s hard to tell the difference between what would have happened anyway and what is the result of Brexit. Scaremongering about Brexit or Leave which has not even happened yet.

      It seems only the Governor of the Bank of England truly understands how the main 3 Brexit outcomes will turn out but he’s not British so perhaps he’s prejudiced and should not be totally believed.

      No matter what the outcome of Brexit we will never know how the other options would have turned out and any chaos or crash that may occur with any outcome, even including Remain , may happen anyway albeit with a different time scale.

      PS. The Governor, isn’t he a friend of Mr Draghi ? To what extent will the UK, if we decide to ‘Remain’, be liable to help out the ECB should a banking crisis occur in Italy or France in the next year or two.

  21. Steve says:

    You missed three of the more important reasons, the BoE told lenders to stop selling leases to people who couldn’t afford them, which stopped the leasing market dead. Then of course GM sold Vauxhall and PSA won’t eat the losses like GM did. Finally the government after telling us for years to cut CO2 switched car tax to a none CO2 based value making older cars £100 pay cheaper to run.

    Combined with the diesel problem the market is dead.

  22. Jeff says:

    As diesel cars and truck sales drop, platinum has become crazy cheap. Never in my lifetime have I seen it at such discounts to gold and palladium. Picked some up when spot was $780 a few seeks ago. Hoping a world without diesel and petrol vehicles, will still value platinum.

  23. Cashboy says:

    I live in Thailand and there has been a 20% growth in car sales in 2018.

    I suspect a lot of this growth is due to the available credit which is offered 84 monthly payments.

    Most popular car is the diesel Toyota Hilux PickUp Truck.

    • HMG says:

      I had my arm twisted into buying a new Hi-Lux 2.8 diesel automatic Pick up in Surin, Thailand, so some of the 20% is down to me.

      I hope to get to use the Truck one day ; the person using it at the moment says it’s great ! I seem to recall it cost about US$27000

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