If the financial crash of 2008 has done one positive thing for consumers, it has inspired a host of flexible lending products that have made financing more accessible.
This has been borne out by the rise of alternative finance and the type of bad credit loans offered by providers such as Likely Loans, which have removed many of the financial market’s barriers to entry and aided individuals with poor or inadequate credit histories.
Despite this, however, car sales in the UK have continued to plummet throughout 2018, particularly in relation to the previous years’ figures. But why exactly is this the case?
Regulatory Changes, Diminished Production and the Spectre of Brexit
Of course, the economic climate in the UK has been strained by a number of factors this year, and in this respect it stands to reason that car sales should have diminished slightly during this period.
However, it’s the rate of decline in the automotive sector that’s incredibly alarming, with sales having fallen by a staggering 20.5% in comparison with 2017.
One of the primary reasons behind this is a recently introduced EU regulation, which came into force on September 1st and required all cars manufactured in the single bloc to undergo a new test before they can be sold.
The test, referred to as the Worldwide Harmonised Light Vehicles Test Procedure (WLTP), has been designed to strengthen the single market’s C02 emissions standards following the recent scandal surrounding Volkswagen. As a result, manufacturers are unable to shift their vehicles at the desired rate, with the bottom line sales figure bearing the brunt of these delays.
Not only this, but production in the UK has also declined this year, with an increasingly strained relationship between Britain and the EU playing a significant role in this.
In total, car production declined by 10% in October alone, with the continued uncertainty surrounding Brexit having a detrimental impact on the automotive industry. This began when Jaguar Land Rover decided to move production of its Land Rover Discovery from the West Midlands to EU member state Slovakia during the summer, with other firms planning similar moves or a slowdown in manufacturing prior to March 29th, 2019.
This uncertainty has also impacted on customers too, with consumer borrowing in the UK having recently experienced its slowest growth in three years. Make no mistake; customers are actively look to cap their spending and avoid seeking out credit for big ticket purchases in the current economic climate, while households have spent around £900 less in 2018 than they did last year.
The Last Word
These factors have clearly combined to create the perfect storm in the automotive trade, and one that is threatening several manufacturers and the future of the industry as a whole.
While much will depend on the type of terms that eventually define Brexit, there’s no doubt that the market is braced for a significant period of transition that could be sustained well into 2019 and beyond.