UK Edition
New cars sales plunged 44pc in March as coronavirus drove away motorists and shut down the industry.
Just 255,000 vehicles were sold in the UK last month, according to the Society of Motor Manufacturers and Traders - down from 458,000 a year earlier.
Dealers had reported social distancing measures making it hard to sell cars even before the lockdown began on March 23, sending the economy into freefall and causing consumers to rethink major outlays.
March is normally the biggest month for sales as buyers are attracted by the launch of a new registration plate number. Without the plate change the decline would have been even steeper, as many consumers agree deals further in advance than normal.
The SMMT data shows it was the worst March in more than 20 years for registrations of new cars, a proxy for sales.
The decline was also steeper than the 30pc drop in 2009 at the height of the financial crisis, and worse is expected in April with the economy completely closed to fight Covid-19.
Mike Hawes, SMMT chief executive, said: “With the country locked down in crisis mode for a large part of March, this decline will come as no surprise.
“Despite this being the lowest March since we moved to the bi-annual plate change system, it could have been worse had the significant advanced orders placed for the new 20 plate not been delivered in the early part of the month.”
The SMMT has now slashed its sales forecast for the year by almost 25pc to 1.73m vehicles this year. An updated outlook will be released later this month.
Despite the sales collapse, the industry body warned against drawing long-term conclusions from the dire figures.
Mr Hawes said: “This is a stark realisation of what happens when economies grind to a halt. How long the market remains stalled is uncertain, but it will reopen and the products will be there.”
Decline in UK car sales was not as dramatic as in some European nations. Having started their lockdowns earlier in the month, Italy registered a drop of 85pc in March, France fell 72pc and Spain was 69pc lower.
Coronavirus is set to cause shockwaves throughout the industry, affecting the sale of both new and used cars.
Economic chaos caused by people being laid off or furloughed is also set to force manufacturers to offer payment holidays for cars bought on finance.
Consumers - who are responsible for buying about half of new cars on the market - buy about 80pc of their vehicles on lease deals.
Without allowing customers to delay their payments, the industry could be hit by thousands of vehicles being returned early by drivers unable to afford them. This would be likely to send secondhand car prices tumbling, further destabilising the market.
Michael Woodward, Deloitte’s head of automotive, said: “The industry is beginning to introduce flexible measures around payments to protect the interests of consumers.
"These include contract extensions, payment deferrals, interim loans and refinancing packages.”
Analysis of the registration figures showed buyers continue to snub diesel due to pollution fears.
Diesel vehicles' market share dropped to 17.6pc, down from 25.7pc a year ago. Petrol cars' share also fell, to 60.1pc of the market from 66.6pc.
Alternatively fuelled cars such as electric and hybrid vehicles almost tripled their market share, rising to 22.3pc of all new cars sold in March from 7.8pc a year ago.