Fears and uncertainty concerning the future of diesel-fueled automobiles in the United Kingdom have ushered in a massive drop in new car sales. Compared to March of 2017, the UK saw a decline of nearly 16% in 2018. What does that mean? It means one year ago there were more than 2.5 million new automobiles sold to consumers that were not purchased this year. This is a major drop and a big concern for the far-reaching automobile industry.

What sparked the change?

The five year period prior to 2017 was quite healthy. But 2017 will go down in the books as an unusual and chaotic period. In March of 2017, things looked good for the booming industry. Record sales were being reported. However, in November of that year, the budget reflected a tax increase on diesel. This came with talks of cleaning up the air and where diesel-fueled automobiles fit into that equation. By December sales dropped nearly 14%. More than 150,000 diesel-fueled automobiles were sold in December of 2016 that were not sold in December of 2017.

Alternative Fuel Cars

The industry is seeing a modest increase in alternative fueled cars. The increase equals about 119,000 vehicles being purchased that operate with fuels other than diesel. However, less than 14,000 of those vehicles were powered solely by electricity. Hybrids were in the mix. The numbers were simply not nearly high enough to sustain the staggering industry.

A secondary but important issue

86% of the automobiles that are bought and sold in the UK are imported, primarily from Britain. Citizens are refraining from making these high-cost purchases due to a higher exchange rate. As the UK prepares to pull away from the EU (a decision that was decided by a 52% vote) the repercussions are being felt across the country. UK car manufacturers are in a panic. The majority of their product is shipped to Europe. Going it alone could mean a 10% tariff could be put on each vehicle they produce. Many people are wishing they could reverse their vote.

What next?

Car manufacturers are feeling the pinch and the pain is being shared all the way down the chain. As manufacturers and suppliers are determining where to put their money, the voice of the people of the UK is being heard, loud and clear.

Uncertainty is bleeding the industry and decisions need to be made to allow the bleeding to stop. People will hold their money and wait until they know where this will fall. Unfortunately, lack of a clear plan of action is fanning the flames of fear. The world is watching the UK see how this unfolds. Without a decisive plan of action, it may not end well. From steel manufacturers to assembly lines, the financial punch to the gut will be tough to recover from. The numbers are still dropping and only time will tell when they will stop and how the world’s economy will handle the new normal for the automotive industry.