Cars sales are down!

The rush to buy 66 plate cars with lower VED in January-February has left a dearth of buyers in April-May - in addition demand for diesels is down and car makers can't switch instantly.

An interesting question.

The registration changed to "17" on 1st March. The car tax change was effective from 1st April.

So any cars registered in March bear the current registration. For low emission cars with old road tax below £140, it would have made sense to register before 1st April when the annual rate went up to £140. For larger high emission cars under £40k it would make sense to delay purchase until after 1st April.

But for dealers a pre-reg car is a depreciating asset whose value will fall by several £'000 on 1st September when the new reg will be applied. Therefore the real bargains will be had in relatively low emissions cars registered during March which remain unsold during July/August.

Higher emission cars registered pre 1st April will carry the higher old rate of car tax. Few may have been pre-registered as dealers would be holding a vehicle whose tax would be cheaper if registered after 1st April.

This may all be noise depending on the outcome on Thursday as consumer spending could fall materially due to future uncertainty - Brexit, no overall majority etc.

An upsurge in demand and prices is unlikely,. There must be a real risk of reduction as consumers and business considering a new car purchase are normally able to defer purchase by 6-12 months.

But the car manufacturers will have modelled their optimum strategy depending on their cost base, market projections, exchange rates, sales targets etc. So the level of excess vehicle production and discounts will depend on what they have already planned and how quickly they can adapt if they have made the wrong assumptions.