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UK new car sales fall 40% in January as lockdown bites

car dealership

Just over 90,000 new cars were sold in the UK in the slowest January for more than 50 years, according to industry figures released on Thursday.

Sales fell 40% compared with January 2020 to 90,249, as the closure of car showrooms under lockdown compounded the economic gloom.

The Society of Motor Manufacturers and Traders (SMMT) said the uptake of “click and collect” sales had prevented an even greater fall but could not avert the worst start to a year since 1970.

The SMMT forecasts that 2021 sales will rebound slightly from the depths of 2020, but said the industry would face a very subdued and challenging year, with showroom closures depressing demand and manufacturing output. New car sales fell by 29% last year to 1.63m vehicles, the lowest level since 1992.

Mike Hawes, the SMMT’s chief executive, said: “Following a £20.4bn loss of revenue last year, the auto industry faces a difficult start to 2021.”

He said the UK’s lockdown was necessary but that it would “challenge society, the economy and our industry’s ability to move quickly towards our ambitious environmental goals”.

“Every day that showrooms can safely open will matter, especially with the critical month of March looming,” he said. The highest monthly vehicle sales are normally recorded in March when the number plate changes, accounting for almost a fifth of annual registrations.

The chief executive of the National Franchised Dealers Association, Sue Robinson, said retailers were optimistic about the year ahead if dealerships were able to reopen as soon as safely possible. “Sales will likely be fuelled by pent-up demand, rising registrations of low- and zero-emission vehicles and the increasing importance of car ownership,” she said.

Lenders said the impact of Brexit was also starting to show. The managing director of Close Brothers Motor Finance, Seán Kemple, said: “Ford has upped prices on some models due to the nature of their production lines across the globe, and there’s a risk other manufacturers will follow suit.”

Diesel vehicles fell further from favour, accounting for just 12% of new cars sold in January. Electric car sales were up more than 50% to 6,260. At 40, there were almost twice as many models on the UK market than at the start of 2020. Pure battery and plug-in hybrid models together accounted for almost one in seven of all cars sold.

Auto Trader’s commercial director, Ian Plummer, said sales of greener vehicles still did not account for any meaningful levels of volumes. “The plethora of new EVs [all-electric vehicles] on the market gives consumers some excellent options, but the high price tags hold many back from turning interest into purchase,” he said.

The SMMT said the CO2 emissions of new cars sold in 2020 were 11.8% lower than the previous year at an average of 112.8g/km, but that there could be “no let-up in the pace of environmental improvement”. The industry has to reach a UK-only fleet average target of 95g/km this year or face large financial penalties.

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UK new car sales fall 40% in January as lockdown bites

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