Warning Brexit poses ‘existential threat’ to car industry amid biggest sales crash in a decade

New car sales fell by 7% last year with the industry blaming "a perfect storm" for the decline. Photograph: Andrew Matthews/PA Wire - Credit: PA

The Society of Motor Manufacturers & Traders has warned there is now an ‘existential threat’ to the car industry as figures show sales fell by 7% last year.

Some 2,367,000 new cars were registered in 2018, down more than 173,000 on the previous year with the UK trade body predicting a further 2% drop in demand this year.

The society’s chief executive Mike Hawes described 2018 as ‘highly turbulent’ and warned that a drop in consumer confidence linked to Brexit, concern about diesels and the impact of a new testing regime are all having a negative effect on the market.

‘The challenges before us are something of a perfect storm,’ Hawes said.

‘It’s causing considerable worry and agitation across boardrooms both in the UK and abroad.’

He said it would be ‘unfair’ to attribute the entire drop in demand to fears over the UK’s withdrawal from the EU, he believed that falling consumer confidence has reduced people’s inclination to make a ‘big ticket purchase’.

A no-deal Brexit would be a ‘catastrophe for the industry’, according to Mr Hawes, who stated that Theresa May’s agreement with the EU is ‘not a perfect deal’ but would provide the transition period the automotive sector needs.

The ‘lingering sense of uncertainty’ around how diesel cars will be taxed and treated is also affecting the total number of cars being sold, Hawes said.

Best for Britain champion Madeleine Moon MP blamed the ‘uncertainty’ left by the government over Brexit.

She said: ‘Parliament will not let the UK leave without a deal, but the uncertainty around the country’s future caused by the prime minister refusing to rule out no deal is a source of concern for the car industry.

‘It’s irresponsible to leave these businesses in the lurch by threatening to crash out of the EU with only 12 weeks to go before 29 March. Over the last two years, the automotive industry has been consistently unequivocal about the risks of no deal and the harm it could do to people’s livelihoods and company profits. The prime minister has simply ignored these warnings.

‘Theresa May should have ended the uncertainty months ago by immediately ruling out a no deal scenario to reassure businesses and the public.’