Registrations of new cars are expected to drop by 4.7% at 2.565 million units compared to sales of 2.693 million in 2016 due to the impact of Brexit on consumer confidence and the weak pound.
The downgrade from the Society of Motor Manufacturers and Traders (SMMT) was the third this year. Forecasts are revised on a quarterly basis in January, April, July and October.
Diesel cars at 1.091 million were a 42.5% share of total car registrations, but were down 15.1% on the 2016 level. LCV registrations at 0.365 million units saw a 2.8% fall on the 2016 level.
The industry body is predicting an even bigger decline in 2018, with expectations of a 5.4% drop on the previous year to 2.426 million registrations.
Unprecedented number of headwinds to car industry
Chris Bosworth, Director of Strategy at Close Brothers Motor Finance, said: “Following six consecutive months of falling car sales, including a disappointing dip in the traditionally successful September when new registration plates are introduced, the latest predictions from the SMMT are likely to concern manufacturers and franchised dealers.
“There has been an unprecedented number of headwinds to the car industry this year with VED changes, continued Brexit uncertainty, a weak pound, and the 2040 ban on petrol and diesel cars.
"Whilst registrations are expected to stabilise in 2019 with a forecast figure of 2.397m, we’re yet to see the full consequences of a simultaneous shift in consumer behaviour and government and regulator policy changes."
Freddy Macnamara, CEO and founder of Cuvva, said he didn’t think the trend could be solely down to Brexit uncertainty. He added: “We’re seeing a paradigm shift in the attitude towards car ownership, especially among city dwellers. This is partly down to the rising cost of running a car, but is also a result of technology, with apps such as Uber giving people cheaper options.
“Driving habits are also changing, and it’s becoming more and more popular for infrequent drivers to car share, or borrow cars from friends and family for short periods, rather than have their own vehicle.”