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Tax changes and diesel fears put heavy brake on April UK car sales

Changes to tax rules have prompted a heavy slump in new car sales across the United Kingdom during April, according to official data.

The Society of Motor Manufacturers and Traders (SMMT) reported Thursday that new registrations fell by almost 20 percent from the same month last year.

Conversely, sales in March had surged as buyers sought to avoid a new vehicle excise duty (VED) which has caused many new cars to be significantly more expensive to tax.

The Nissan car plant in Sunderland, north east England on October 25, 2016.
Scott Heppell | AFP | Getty Images
The Nissan car plant in Sunderland, north east England on October 25, 2016.

In a press release accompanying the data, SMMT Chief Executive Mike Hawes said a slowdown was to be expected.

"With the rush to register new cars and avoid VED tax rises before the end of March, as well as fewer selling days due to the later Easter, April was always going to be much slower," he said.

Overall in April, 152,076 cars were registered with fleet purchases for businesses and government agencies accounting for almost 60 percent of new cars.

Hawes said the drop of from March's bumper figure of 170,000 does not suggest a trend.

"It's important to note that the market remains at record levels as customers still see many benefits in purchasing a new car. We therefore expect demand to stabilise over the year as the turbulence created by these tax changes decreases," Hawes added.

The SMMT reported that demand was lower across differing types of buyers with registrations by private buyers, businesses and large fleets falling -28.4%, -21.0% and -12.3% respectively.

Getty | Carl Court | Staff

In terms of fuel types, purchases of diesel cars in April slumped more than 27 percent from the same month in 2016.

Diesel fueled cars have been subject to much negative media attention due to claims that toxic emissions of nitrogen dioxide is causing premature death.

This week several media reports claimed the U.K. government will pay British drivers to scrap diesel cars in order to improve air quality.

U.K. petrol car sales in April fell 13.1 percent year-on-year while alternatively fuelled vehicles saw the first monthly fall in demand for almost 4 years.

The top best-selling car in the U.K. during April was the Ford Fiesta, with the Nissan Qashqai and Mercedes C Class following close behind.

The SMMT estimates that the automotive industry accounts for $18.9 billion in added value to the U.K. economy, employing as many as 814,000 people.