Britain has reached ‘peak’ car, according to the boss of the UK’s biggest motor dealer.
Trevor Finn, the chief executive of Pendragon, said so many people now own their own vehicle that the market for new cars simply cannot get any bigger.
Instead of blaming Brexit or fears of swingeing penalties on diesel drivers on the industry’s recent decline, he said this was the biggest factor in the recent fall.
The chief executive of Pendragon believes so many people now own vehicles that the market for new cars can’t get any bigger
He said manufacturers are also building too many cars and have failed to adjust to the fall in demand.
This is pushing down the price of both new and second hand cars.
Pendragon owns the Evans Halshaw and Strastone brands in the UK.
Speaking as the firm issued a profit warning – causing shares to plunge by as much as a fifth – Mr Finn said: ‘The car market has reached its peak from a growth part of view.
‘The number of new car buyers has probably reached its plateau. Demand has waned.
‘There are 32 million cars in use. This number has grown every year since the war. People are still attached to car ownership. But the reality is that with the advent of more affordable cars, people who want a car already have one.’
He added: ‘There is an oversupply of cars which is pushing down prices of new cars. This is having a knock-on effect on the value of second hand cars.’
Mr Finn said manufacturers will have to reduce the number of cars they build to match demand, arguing this will push up its price.
According to the latest financial report, car manufacturers are also being forced to sell newly registered cars at ‘significant discounts’.
This, it said, is driving down the value of nearly new cars.
London Mayor Sadiq Khan is imposing charges on those who driver older, more polluting cars – particularly diesels
The car industry has blamed uncertainty generated by the Brexit vote, as well as concerns that councils across the country will emulate London Mayor Sadiq Khan by imposing swingeing charges on drivers of older, more polluting cars – particularly diesels.
Latest figures from the Society of Motor Manufacturers and Traders show new car registrations have fallen for six months in a row.
This means 2017 is on course for the first annual decline in new car sales since 2011, in the wake of the financial crisis.
Overall, sales fell by more than 9 per cent in September to just over 460,000, while sales of diesel cars crashed by almost 22 per cent.
The SMMT blamed the Brexit vote for creating uncertainty and making households and businesses more nervous about making ‘big ticket purchases’ like a new car.
It also said confusion about air quality plans had triggered a slump in sales of diesel cars.
Demand for new cars across the country has hit a plateau, according to Trevor Finn
Local councils have been ordered to come up with plans to curb air pollution, focussing their efforts on curbing emissions, which are generated in greater quantities by diesel cars.
Motoring groups fear some councils could impose hefty penalties on drivers of old concerns for using their cars in town centres.
But Mr Finn told the Mail that neither Brexit nor the prospect of charges for diesel drivers is to blame for the fall in car sales, which has caused profits to fall at his firm in the three months to the end of September.
He said: ‘We’ve had a poor barbeque season, the increase in Vehicle Excise Duty on new cars in April and there is a lot of talk about Brexit. Would I pin a flag to any of those things?– no.’
Pendragon sells around a quarter of a million new and second hand cars each year and has around 220 outlets in the UK and Southern California.
Its shares tumbled by 18 per cent (update at close) after it warned that its profits would take a hit from falling demand for new cars amid a decline in consumer confidence.
The group said it expects full year profit to come in at £60 million, down from last year’s £75.4 million.