U.K. Car Sales Drop Most Since Recession on Brexit, Diesel

(Bloomberg) -- U.K. car sales suffered their biggest annual slide since the global recession, stunted by Brexit's impact on buyer confidence and lingering skepticism over the emissions performance of diesel models.

Registrations fell 5.7 percent to 2.54 million vehicles, the steepest drop since 2009, according to the Society for Motor Manufacturers and Traders. Demand for diesel autos slumped 17 percent, with a customer swing back to gasoline models leading to the first annual increase in carbon emissions since records began in 1997.

The decline from record sales in the previous two years comes as uncertainty about terms for the U.K.'s exit from the European Union weighs on consumer sentiment and the drop in the value of the pound crimps Britons' spending power. The registration slide is set to continue in 2018, with the SMMT forecasting a contraction of 5 percent to 7 percent.

“The market is still close to historic highs,” SMMT Chief Executive Officer Mike Hawes said at a briefing in London. “Nevertheless we are seeing a decline, which is a concern.” New registrations in December fell 14 percent, the ninth consecutive monthly drop, the trade body said.

Concerns over rigged emissions-testing of diesel cars from Volkswagen AG and investigations at competing automakers are also discouraging owners from purchasing new vehicles, while other drivers have switched to gasoline-powered models, a trend that has reversed a 19-year run of annual declines in emissions from new cars, according to the SMMT.

Newly purchased vehicles emitted 121.04 grams of carbon dioxide per kilometer in 2017, up 0.8 percent from a year earlier. The market share of diesel engines, which typically emit about 20 percent less CO2, declined to 42 percent from 47.7 percent.

Britons bought almost 120,000 hybrid and fully electric vehicles last year, accounting for 4.7 percent of total sales. Some 87 alternative-fuel models are currently available in the U.K. market, Hawes said.

To contact the reporter on this story: Benjamin Katz in London at bkatz38@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper, Tom Lavell

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