New car sales slump 20% after car tax changes

The majority of drivers of new cars are paying more tax says the RAC
The majority of drivers of new cars are paying more tax says the RAC

New car sales fell by 20% last month as the market felt the effect of sweeping tax changes, industry figures show.

Some 152,076 new cars were registered in April, the Society of Motor Manufacturers and Traders (SMMT) said.

Many buyers brought forward purchases to March, ahead of new vehicle excise duty (VED) rates coming into force on April 1, according to the trade body.

All new cars, except for those with zero emissions, are now subject to an annual flat rate charge. RAC research found the vast majority of drivers buying new cars are paying significantly more following the change.

New car sales in March were up 8% compared with the same month last year, making it the largest monthly total recorded by the industry at 562,337.

Despite the substantial decline last month, registrations for the first four months of the year were up 1% on 2016.

SMMT chief executive Mike Hawes said: “With the rush to register new cars and avoid VED tax rises before the end of March, as well as fewer selling days due to the later Easter, April was always going to be much slower.

“It’s important to note that the market remains at record levels as customers still see many benefits in purchasing a new car. We therefore expect demand to stabilise over the year as the turbulence created by these tax changes decreases.”

The alternatively-fuelled vehicle market was down by 1% last month, the first fall in almost four years.

The data also shows the year-to-date market share for diesel cars has declined from 48% this time last year to 44%.