Post-Brexit decline in British car sales predicted

Britain’s new car market is feared to be heading into a post-Brexit decline destined to knock sales back to 2.4 million a year in 2017 – a loss of around 250,000 new car sales.

The disappointing forecast has emerged as the car industry grapples with the fall-out of the Brexit vote, which has knocked sterling and business confidence and is negatively impacting investment.

"These are early days," said a spokesperson at market researcher IHS Global, "but we are in a negative shock situation and the initial assessment is a decline in the market."

New car sales were expected by IHS Global to hit 2.7m by the end of this year, a small increase on last year’s 2.6m.

However, the negative effect on the UK economy is now forecast to push that down by up to 55,000 units to 2.64m.

"Effectively, all the growth experienced in the first half of the year is likely to be wiped out," said IHS Global analyst Colin Couchman.

VW Group UK boss Paul Willis told Autocar that forecasts he has been shown suggest an even lower figure. "The numbers I’ve seen suggest a market heading towards 2.55m this year," he told Autocar at the Goodwood Festival of Speed last weekend.

The critical month will be September, which last year recorded sales of 465,000 and faces a loss in 2016 of perhaps 50,000 sales – a dramatic reversal.

But the real impact of Brexit will be felt in 2017, when importers will be able to adjust their forward buying orders, after taking a view this autumn on next year’s market prospects.

IHS Global currently predicts a further market drop to 2.4m units in 2017. Previously, it forecast 2.61m units.

Willis puts the range for 2017 between 2.3m and 2.4m – a slightly bigger drop, but on a similar scale. “It just depends on what percentage decline you think we might experience next year," he said.

A major factor in sales will be price increases stemming from a long-term currency adjustment that will make imported cars more expensive.

"Sterling has already weakened 6%. If that becomes the norm, you can imagine the effect on prices," Willis told Autocar.