New car sales fall in UK as Europe’s manufacturers feel strain from weak demand

Sales of new cars in the UK fell last month, according to industry data highlighting the stubborn difficulties manufacturers and showrooms across Europe are facing.

The Society of Motor Manufacturers and Traders (SMMT) reported a 1.3% decline in August compared to the same month in 2023, with 84,575 new cars sold.

“Heavy” summer discounting continued to drive electric vehicle (EV) sales, the industry body said, rising almost 11%.

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But the SMMT warned that much would depend on the “critical” current month, which sees the release of the new 74 number plates.

It reiterated its plea for more government aid to help drive EV sales.

The outlook remains challenging for manufacturers globally due to weak demand from a wealth of headwinds including continued constraints on consumer finances at a time of heavy investment in EV technology.

Pressures facing Europe’s car manufacturers, including those in the UK, mount up to one of a lack of competitiveness – especially in the face of cheaper EVs from China.

High energy prices and wages are just two of the imbalances, with the European Union imposing additional tariffs on Chinese-made EVs on the grounds that their lower prices points are the result of state subsidies.

The shift towards electric cars is also being hampered by caution among buyers over electric vehicle ranges and a lack of infrastructure to support the vehicles.

A major stumbling block has always been prices, with electric cars remaining more expensive generally than a comparable model powered by petrol or diesel.

SMMT chief executive Mike Hawes said on Thursday: “August’s EV growth is welcome, but it’s always a very low volume month and so subject to distortions ahead of September’s number plate change.

“The introduction of the new 74 plate, together with a raft of compelling offers and discounts from manufacturers, plus growing model choice, will help increase purchase consideration and be a true barometer for market demand.

“Encouraging a mass market shift to EVs remains a challenge, however, and urgent action must be taken to help buyers overcome affordability issues and concerns about chargepoint provision.”

There were signs this week that the pressure is beginning to take its toll, as manufacturers across Europe demand greater government support to help the battle against climate change through the transition to EVs.

Volvo revealed on Wednesday that it had reversed from its pledge to stop selling cars with internal combustion motors by 2030.

The Chinese-owned brand blamed the slow rollout of places to charge up and withdrawal of purchase incentives.

Volvo said these pressures meant there was room for a few cars that still needed to be powered by fossil fuels.

Executives at Volkswagen (VW), Europe’s top carmaker by revenue, set a collision course with production workers this week when they signalled that plant closures were inevitable if the brand was to successfully navigate the shift to EVs.

Its finance chief told a gathering of 25,000 staff in Wolfsburg on Wednesday that VW had “one, maybe two” years to turn its main car brand around by cutting spending and output to meet lower post-pandemic demand.

Arno Antlitz said VW was facing a shortfall in demand of about 500,000 cars, equivalent to about two plants.

Unions have not ruled out strike action in response and vowed to fight any cuts to jobs, accusing management of damaging trust.

The looming shake-up was revealed as the fallout from the company’s hugely brand-damaging dieselgate scandal continued to play out.

Former chief executive Martin Winterkorn appeared in court on Tuesday on charges of fraud and market manipulation.

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The 77-year-old, who was due to go on trial in 2021 but for reported ill health, stepped aside days after it was revealed in 2015 that the company had rigged software to allow millions of new vehicles to cheat emissions tests.

Volkswagen has paid more than £26bn in fines and legal settlements since – the vast bulk of that sum in the United States.

Prosecutors in Germany say Winterkorn knew about the illegal software at least 10 months before the US Environmental Protection Agency announced its discovery of the violation.

He denies the charges, which could carry up to 10 years in prison, arguing he only had knowledge of the so-called defeat devices days before they were made public.