New Car Registration In The UK Sinks 2.4% In 2019, Auto Stocks Trending lower At The LSE.

• New car registration slump 2.4% in 2019 to 2.36m units. Uncertainties pertaining to the emission regulations are among the reasons behind the decline in new car registration
• Battery operated electric car registration surge to a record high level, surged 144%.
• The effects of Brexit-related uncertainties are leading to weaker consumer and business confidence and affecting new car sales.

According to the latest report released by the Society of Motor Manufacturers and Traders (SMMT), new car registration in the CY19 tumbled to a six-year low, driven by uncertainties related to the Brexit trade deal and a lack of clarity over emission norms which has restricted to buyers to open their purse strings for new car purchases.

New car registration sank 2.4% in 2019 to 2.36m units against the year-over period and the annual registrations declined for the third consecutive year. This was driven by a multitude of reasons ranging from lower business and consumer confidence, political and economic instability and a lack of clarity over clean air zones as well.

A declining private demand drove down registrations from consumers to a negative 3.2% while the small volume business market also plummeted sharply by 34.4%. However, fleet registration was broadly in line against the year-ago period and improved by 0.8%.

Although demand contracted in almost every vehicle segment, the dual-purpose and specialist sports categories witnessed growth uptick and increased by 12.0% and 19.2% respectively. Even though superminis and lower medium car sales fell by 6.0% and 4.0% respectively, these smaller vehicles remain the most popular- with a consolidated 57.1% market share.

During the year under review (CY19), there was a decent increase in the demand for petrol cars, an increase of 2.2% on YoY basis, although an uptick in the petrol car sales was not adequate to offset the impact of a 21.8% plunge in diesel car registrations.

However, Battery Electric Vehicle demand surged steeply by 144% to record levels, although the market for BEV is still very small at 1.6% of the total market. There is a long way to go to reach a market share of 50-70% which the government has vowed to achieve in the next ten years. Yet the target is far away from the current levels and has not been supported by a sharp decline of zero emission-capable plug-in hybrids, which was down by almost 17.8% year over year.

Also, the Society of Motor Manufacturers and Traders (SMMT) reported that data showing the new car fleet average carbon di-oxide (  ) rose for the third successive year to 127.9g/km, up by 2.7%. Increased capital expenditure by manufacturers into advanced powertrains, lightweight materials and aerodynamics signifies that new cars are more efficient than ever, with new cars emitting approximately 29.3% less   than models manufactured in 2000.

The registration for combined alternatively fuel vehicle (AFV) increased in 2019 and holds a record high market share of 7.4%. However, Hybrid electric vehicle continued to dominate this industry with registration surging by 17.1% to 97,850 units and Battery electric vehicle registration experienced the highest growth of 144% to 37,850 units and surpassed plug-in with the hybrid vehicles for the first time.

December 2019 sales ended on a positive note

Despite a decline in the overall car registration during the full year 2019, Festive month of December’19 ended the volatile year on a positive note and registrations surged by 3.4%, driven by 2.6% growth in demand for petrol cars and an unexpected increase in the Battery-Electric Vehicles which registered a growth rate of 220.7% year over year. However, an uptick in December was broadly offset by a 19.0% contraction in the offtake of diesel vehicles.

Notwithstanding the decline witnessed in the CY19, the UK car industry remains the second-biggest market in the European Union after Germany. Also, it has been been one of most diverse, where people are able to place requisition for approximately 350 models available in a range of body styles and fuel types to suit all driving needs. Out of 350 models, nearly 90 exciting new generation models, 23 of which are zero-emission cars and 11 plug-in hybrids, are set to make their showroom debuts in 2020- as per the report released by SMMT.

Mike Hawes| Chief Executive at SMMT, commented that:

A consecutive third year of decline for the UK new car market is a serious problem for the industry and wider economy. Uncertainties pertaining to politics and economics and a lack of clarity over clean air zones have disrupted consumer sentiment, with the demand for new cars at a six-year low.

He also added that a plummeting sales number will trouble the industry's ability to meet stringent  targets. The industry requires more supportive policies ranging from infrastructure development, broader measures to boost uptake in the latest, low or zero-emission cars and a long-term purchase incentive to put Britain at the forefront of this paradigm shift.

Automobile stocks trending lower

January 06, 2020, report of the SMMT over 2019 car sales data has sent automobile and ancillary stocks lower at the London Stock Exchange, with automobile major Aston Martin Lagonda Global Holdings Plc’s (LON: AML) stock plummeting more than 5% or 27 points to GBX 508.60 and during the day’s trading session registered a big swing with a higher level at GBX 548 and a lower level at GBX 508. Another mid-cap stock TIFS (TI Fluid Systems Plc) slumped more than 3% or approximately 9.0 points to GBX 264 and recorded an intraday high of GBX 282.0 and a low of GBX 263.0 while AA Plc’s (LON:AA) stocks sank around 2.21% to GBX 55.25.

However, overall Brexit negotiations remain crucial for the industry performance, with uncertainties ranging from supply-chain disruption and a threat of imposition of a 10% EU import tariff for UK-manufactured cars, in addition to the jolted consumer and business sentiments.