AA says government intervention is needed to reinvigorate demand.

A lack of consumer confidence cost the UK automotive industry an estimated £2.6 billion in 2017, according to the AA.

Data from the Society of Motor Manufacturers and Traders (SMMT) showed that registrations of new vehicles fell by 5.7 percent last year.

The AA’s market analysis found that this drop in demand equated to a £2.6 billion loss of revenue for the year.

And the SMMT’s latest figures show that customers are continuing to stay away from dealerships, with demand down 6.3 percent in January 2018.

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The AA is blaming the shortfall in demand on consumer confidence, after a survey of almost 20,000 motorists that found that 13 percent of drivers blamed the industry’s poor performance on ‘mixed messages from the government’, while 10 percent cited government policy on diesel engines.

Simon Benson, the AA’s director of motoring services said government action was required to stem the continuing slump in registrations.

‘Motorists are clearly wary about purchasing a new vehicle,’ he said. ‘Our research suggests a lack of consumer confidence cost the industry an estimated £2.6 billion in 2017 alone.’

‘Only time will tell whether this trend will continue into March, marking a full year of falling sales. The government needs to act now to incentivise new car buyers back to forecourts before this decline causes real damage.’

The SMMT’s chief executive also said government intervention was needed – particularly to get buyers into new, cleaner diesel cars, which have seen demand fall dramatically due to ‘confusion over government policy’.

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