Under changes to the benefit-in-kind tax regime, Euro IV-compliant diesel cars registered before December 31, 2005, avoided a 3% diesel tax surcharge for the fleet life of the car. However, the 3% levy is applied to all diesel cars registered from January 1.
As a result, there was a massive surge in diesel demand in the run-up to the deadline – fleet diesel registrations were up a massive 57.8% during the month.
However, this level of activity has resulted in a very quiet start to the year, with overall car sales down 13.3% year-to-date to 157,363 units.
During January, fleet registrations fell 14.8% and business sales to fleets with 25 vehicles or less dropped by 23.2%. This performance is worse than the drop in private registrations, which were down by 9.2% in January.
Christopher Macgowan, chief executive of the Society of Motor Manufacturers and Traders, said: ‘January’s figures show the effect when tax changes are not carefully considered.
‘Many company car drivers clearly rushed to take advantage of the 3% tax benefit at the end of 2005. This led to record diesel registrations in December, and today’s weaker January market.’
The January market was the lowest since 1992 and nearly 17% short of the average figures between 1999 and 2005. This reflects forecasts of a continuing decline in new car sales, down from a peak of 2.62 million in 2004 and set to fall to 2.375 million this year and 2.33 million in 2007.
In fleet, Vauxhall saw its share of the market fall by 22.9% year-on-year in January, which the company attributes to a planned reduction in less profitable short cycle business such as daily rental. However, a spokesman said sales to corporate end user fleets were in line with target and stable year-on-year.
The Ford Focus remained the best-selling car in fleet, with sales of 8,181 units in January – up 9.8%.
Click here for January registrations by manufacturer.
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