January 9, 2018

Pegler’s market report – 09.01.18: New car sales suffered their first annual drop in six years

As published in the Brighton Argus (09.01.18) Business section under the title Pegler’s Market Report:

New car sales suffered their first annual drop in six years

New car sales suffered their first annual drop in six years in 2017 as consumers shun diesel cars amid higher taxes and warnings over pollution. Data from the Society of Motor Manufacturers and Traders (SMMT) revealed that average CO2 emissions from cars sold last year were higher than in 2016, reversing a near 20-year decline. The increase is being blamed by the trade group on the backlash against diesel vehicles, which pump out less CO2 than petrol vehicles.

Meanwhile, electric car sales soared 35pc in 2017 but their volumes still pale in comparison to petrol and diesel sales. Some 119,821 alternative fuel vehicles were sold last year, representing just a 4.7pc slice of the car market.

Britain’s biggest car company, Jaguar Land Rover, has defied the slump which has hit the UK automotive market, with annual sales holding steady.

The Coventry-based company said that it had retail sales of 118,213 vehicles in the UK in 2017 – flat on last year – in what it described as a “tough” market.

EasyJet managed to grow its passenger numbers last month despite a surge in cancellations due to bad weather. The budget airline said it carried around 5.9m passengers in December, 5.5pc more than in 2016. But growth fell from an 8.1pc surge in November as Easyjet cancelled 580 flights, up from 330 the previous year. The airline said these were mostly caused by December’s cold snap, as well as some runway closures and industrial action.

Productivity climbed by 0.9pc in the three months to September as British workers produced more output in each hour worked than ever before. The jump in productivity was the fastest for any quarter since 2011. However, after years of miserable growth – and some falls in productivity – output per hour worked is still up just 1pc over the past decade.

UK house prices rose 2.6% in 2017, down from the 4.5% growth seen in both 2016 and 2015, according to Nationwide. But prices in London fell 0.5%, making it the worst performing area in the UK for the first time since 2004. Within the list of towns with the biggest house price rises was Brighton (3^rd) and Crawley (4^th). Cheltenham and Bournemouth were at the top of the table.

Next reported a 1.5% rise in full-price sales over the Christmas period, prompting the retailer to lift its profit forecasts. However, the sales breakdown was mixed. Store sales dropped 6.1% during the period, while online business was up 13.6% – benefiting partly from the cold weather leading up to Christmas.

News from Debenhams was not so good. The department store chain is likely to cut jobs and consider more store closures after a poor festive trading period led to a major profits warning.

By David Pegler, Brighton Capital Management