While the Government continues to be accused of ‘demonising diesel’, registrations of new diesel cars in October fell by almost 30%.
The slump in demand came in a monthly market which ended 12.2% down versus October 2016.
The SMMT said falling confidence among buyers continued to impact the market.
In the private sector registrations dropped 10.1% or 7,850 units, but the fleet market was hardest hit, with a 12,543 unit decline (13%). The small business sector dropped by 26.8% or 1,583 registrations.
The SMMT said rises in deliveries of petrol and AFV cars failed to offset the drop in demand for diesel, which it attributed to “continuing consumer concerns”
Year-to-date, the overall market is down -4.6% on 2016 levels, with 2,224,603 cars registered in the first 10 months.
This aligns with SMMT’s latest reforecast for 2017, published last week, with the market expected to end the year on 2.565 million units – a -4.7% decline.
Mike Hawes, SMMT chief executive, said, “Declining business and consumer confidence is undoubtedly affecting demand in the new car market but this is being compounded by confusion over government policy on diesel.
"Consumers need urgent reassurance that the latest, low emission diesel cars on sale will not face any bans, charges or other restrictions, anywhere in the UK.
"We urge the Government to use the forthcoming Autumn Budget to restore stability to the market, encouraging the purchase of the latest low emission vehicles as fleet renewal is the fastest and most effective way of addressing air quality concerns.”
Richard Jones, managing director of motor finance provider Black Horse, said: “These figures show the new car market is moving to a more sustainable position going forward. In the longer term this correction in sales is positive for the market, and should reduce concerns of new car oversupply impacting negatively on used car values."
Jones said the industry must also remember Brexit has already had an impact on the UK car market through the fundamental shift in the exchange rate which is impacting car prices, making the market correction even more understandable.
"Whilst many – including ourselves – openly expected this correction in sales, it’s more complicated to predict exactly where they will go as we move into 2018.
"Whilst I expect we’ll see a small level of further softening continue into next year, this is mainly because Q1 2017 was so strong.
"Looking beyond that the uncertainties still facing the UK economy make it difficult to make a robust forecast for 2018 as a whole, however the determinants such as UK GDP and employment levels remain robust.
"It’s also worth noting that although we see a continued fall in demand for diesel, this remains an appropriate fuel choice for many drivers.
"Whilst we welcome the ongoing growth in popularity of electric vehicles, we are still at least five years away from them taking a material market share and so traditional fuel types will have a significant role to play for many years to come,” Jones added.
At the National Franchised Dealers Association, director Sue Robinson said that although the continuous increase in alternative fuel vehicles’ sales is encouraging, in the short and medium term they will not fully replace petrol and diesel cars. "Going forward, we must ensure that consumers have the accurate facts and information to be able to choose the car best suited to their needs," she added.
“The significant decline in sales of diesel vehicles shows that consumers have been affected by current media and Government coverage. Modern Euro 6 diesel cars cannot be compared to older diesel models.
“Consumer footfall is stable, with a particular interest in the used car market which remains at high levels. It is crucial that consumers continue to receive support and the Government must send clear messages about its future plans.