Polluting SUVs and other cars could be scraped from sale in the UK, carmakers warned.

  • Jan 14, 2020 GMT
  • Team Kalkine
Polluting SUVs and other cars could be scraped from sale in the UK, carmakers warned.

UK automotive sector is already witnessing immense challenges and going through a paradigm shift within the industry, ranging from plummeting automobiles demand in the China, transition towards the electric vehicles, stricter CO2 emission norms in the UK, Brexit related challenges, contracting global economy and jolted consumer demand sentiment in the wake of trade rifts between the world’s two largest economies, US and China.

Automotive industry’s warning to pull out polluting vehicles from sale in the UK is a fresh blow to the already struggling car manufactures in the UK. Under the new EU rules, average CO2 emission of almost all cars sold during 2020 and 2021 within the EU single market, including Britain must fall below 95kg/km, failing to the new rules would attract heavy fines for the car manufacturers

At present, Britain’s average emission figures for cars stood at 127.9g/km, suggesting that a 25% cut is required from current levels, which is going to be a humongous task for the British car manufacturers, especially given the Britons’ preferred choice for heavier SUVs.

Meanwhile, the Chief of the Society of Motor Manufacturers and Traders (SMMT); the industry lobbying group has said that new emission targets are difficult to meet, and carmakers are investing heavily to meet the target.

He also added that makers can come over with the technology, but they can’t be sure of the pace of implementation. As, it requires a long-term government supports that provide consumers with confidence to invest in the latest technologies, including long-term financial initiatives and investment in infrastructure.

However, in a response to the SMMT’s claims, one climate campaigner Mel Evans argued that "car manufacturers should not be allowed to aggressively market their heavy, polluting cars in the UK." She also added that people are in a climate exigency and manufacturers are intentionally heading towards a point of no-return , because bigger, dirtier cars have higher profit margins, and since they run on gasoline and diesel, the oil companies get benefited as well.

To fix this climate exigency, carmakers needs to avoid production of gasoline and diesel-operated cars and should pause investments to scale up demand for their high polluting cars and instead focus on development of electric vehicles to protect the climate.

Meanwhile, another blow for the global automobile and auto ancillary companies came from China, this morning. Vehicle sales numbers further plummeted 0.1% to 2.66m units in December 2019 against the year-over period. This was the 18th consecutive month of fall in a row, driven by the Chinese government's all-encompassing changes to meet emission standards this year.

Also, the sale of new energy vehicles (NEVs), including plug-in hybrids, battery-only electric vehicles and those powered by hydrogen fuel cells tumbled for the sixth consecutive straight month by 27.4% to December 2019, mainly because of government’s roll-back of incentives for purchases of such cars amid claims that some of the manufacturers have turned more dependent on such funds.

On a full-year basis for 2019, sales slumped by 8.2%, with sales of new energy vehicles plummeting 4% to 1.24m units. However, The China Association of Automobile Manufacturers anticipates a further 2 per cent contraction in vehicle sales in 2020.

Since the 1990s, China's vehicle sales numbers tanked for the first time in 2019, driven by demand contraction led by ongoing trade tensions between the world’s two largest economies, the United States and China, which has weighed heavily on global economic growth as well.

However, plunging Chinese vehicle sales numbers reported today by China Association of Automobile Manufacturers, together with indication that polluting SUVs and other cars could be scraped from sale in the UK to meet emission targets, have dragged Automobile and Auto parts stocks listed and traded on the London Stock Exchange in the January 14, 2020 trading session.

The already struggling stock of British luxury carmaker, Aston Martin Lagonda Global Holdings PLC (LON: AML) have declined around 6.90 points or 1.49% to GBX 455.0 and during the day’s trading; its shares touched an intraday high of GBX 462.50 and a low of £432.90 (before the market close at 02:54 PM GMT). Also, its shares have tumbled more than 11.0% in the past five trading sessions and approximately 17% in a month-over period, as the company issued a fresh profit warning in FY19 trading update filed with the exchange on January 07, 2020 because of a reduction in car sales.

Also, at the current traded level, stocks of AML traded well below its short-term and long-term support levels of 10-day, 20-day, 30-day, 50-day, 100-day and 200-day simple moving averages (SMAs), which is typically perceived to be an unfavourable trend in the stock.

Shares of another automobile parts manufacturer TIFS, whose growth largely comes from an uptick in the car industry and is quite sensitive to the developments within the Automobile industry, plummeted on the London Stock Exchange as on January 14, 2020 trading session.

The stock of the United Kingdom-based TI Fluid Systems PLC (LON: TIFS) have slumped approximately 2.7 points or 1.09% to GBX 250.25 at 03:10 PM GMT (before the market close) and during the day’s trading it touched an intraday high of GBX 253.50 and a low of GBX 246.50, respectively. On a Y-o-Y basis, stocks of TIFS have delivered a price return of approximately 47%; however, they slumped approximately 4% in the past five trading sessions.

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