Should we be concerned about this year’s drop in car sales?

FT Alphaville regrets to inform you that Brexiteer John Redwood, Conservative Member of Parliament for Wokingham, has tweeted again :

Where to start with this?

First up, there’s the issue that Mr Redwood appears to be alluding to: namely reports that Nissan will look to shutter its Sunderland car plant if we leave the EU without a deal. Reports, we should note, that Nissan has just pushed back on, according to the FT’s auto egghead “Piston” Pete Campbell.

However, as Piston notes, the “long term future of the plant still hinges on the Brexit outcome”. So Project Fear -- a term which is generally used by pro-Brexiteers to dismiss worries over the UK post-Brexit -- might just be onto something.

Yet what caught our eye was Mr Redwood’s second and third sentences. He points out that the collapse in UK diesel and petrol car sales this year happened despite our current trading relationship with the EU.

And indeed he is quite right -- here’s how the UK’s car sales look up to October, via the Society of Motor Manufacturers and Traders (SMMT) :

As you can see, diesel and petrol cars sales have tanked 55.1 per cent and 38.9 per cent respectively, ameliorated somewhat by rising sales of pure electric cars (BEV) and various types of hybrid (PHEV, MHEV etc.).

There’s a slight wrinkle here, however.

Because there’s been another macro-economic event this year which hasn’t helped car sales. You may have even heard of it if you have your finger on the proverbial pulse.

But, for those not “in the know” , we’re talking about the global coronavirus pandemic.

An event which caused the UK’s economy to fall by a fifth in the second quarter , has taken the lives of some 64,000 people , and has led to redundancy levels higher than during the GFC :

Want to know what part coronavirus played in all this?

Well in the height of lockdown -- April -- UK car sales fell 97.1 per cent year-on-year. We’re not sure what this has got to do with the nation being in or out of the customs union or single market to be frank. And we’re not sure anyone was “quiet” or unconcerned about it either. For instance, here’s an FT article , a Guardian article , a BBC article and a Telegraph article on April’s numbers. And here are stories of pandemic-induced job cuts at Jaguar , Bentley and car dealerships Pendragon and Inchcape . You get the idea.

It was pretty clear before coronavirus that diesel and petrol cars were in secular decline thanks to a mix of government incentives and carbon-aware consumers opting for more environmentally friendly vehicles. Hence why Nissan is set to make a hybrid, and not a combustion engine car, at its plant in Sunderland next year.

We might have seen that trend in the numbers this year and, if so, it would have happened under our current trade deal with the EU. But, for the moment, we have no clue how much of this decline was due to the pandemic, and how much of it wasn’t. The same also goes for the large jump in market share of electric and hybrid vehicles.

What the car industry does have a better idea about, however, is what a No Deal might do its bottom line . And, unlike the pandemic, that is an issue which the government has some control over.