Volkswagen’s UK sales fell by almost 10% after the emissions rigging scandal, but other big carmakers also suffered steep declines as demand tailed off after a period of unprecedented growth.

New car registrations in Britain slipped in October by 1.1% on last year, to 177,664, – the first drop in nearly four years – according to the Society of Motor Manufacturers and Traders (SMMT). Diesel car sales fell 2.1%; petrol cars were down 0.9%.

Sales of VWs fell by 9.8%, while the company’s Spanish Seat brand registered a much sharper decline, of 32%, and its Czech brand, Škoda, was down 3%. Its Audi marque was up 2.2%, however.

The Volkswagen Golf is still one of the UK’s bestsellers, ranking in third place last month behind the Ford Fiesta and the Vauxhall Corsa. The Volkswagen Polo was in seventh place.

Other manufacturers also posted marked annual declines, with Ford sales falling 8.8%, General Motors’ Vauxhall brand down 16.4% and Citroën sales 18.5% lower.

Ana Nicholls, automotive analyst at the Economist Intelligence Unit, said: “Given the scale of the scandal affecting Volkswagen, the drop in its VW-branded car sales seems like a fairly modest setback, suggesting that most consumers are reserving judgment – or continue to assume that VW was not the only company overstating its fuel efficiency.”

This confirmed what car dealers such as Pendragon had been saying: that the VW scandal has had little impact on the brand so far, even though new revelations are still coming to light, she said. Only Seat has taken a big hit, suggesting that the brand’s recent management shakeup and strategy announcement are much needed.

Nicholls added: “That said, there are signs that the confidence of car buyers in the whole industry has been shaken by the VW scandal. After all, this is the first drop in car sales in the UK for three and half years, and comes at a time when confidence in other sectors of the economy (housing, retail sales) appears to be strong.”

The scandal widened this week when Porsche, owned by VW, got caught up in it and Volkswagen admitted “irregularities” in the levels of carbon dioxide emitted by 800,000 cars sold mainly in Europe. This means that it could have to repay billions of pounds in tax to European governments.

The SMMT said it was too early to tell the impact from Volkswagen’s emissions rigging scandal, which has affected 11m diesel vehicles worldwide. Some people pre-ordered their cars months ago.

Mike Hawes, the SMMT’s chief executive, said: “The UK car market has gone through a period of unprecedented growth and, so far, 2015 has been a bumper year with the strongest performance since the recession. As expected, demand has now begun to level off but the sector is in a strong position, as low interest rates, consumer confidence and exciting new products combine to attract new car buyers.”

Other data suggests the deepening crisis at Volkswagen is starting to put customers off. The German carmaker’s sales in South Korea nearly halved in October from a year earlier, falling below 1,000 vehicles for the first time in four years.

Volkswagen sold 947 cars in South Korea in October, the first full month since the emissions scandal broke, according to the Korea Automobile Imports and Distributors Association. The company admitted in mid-September that it had installed software in some of its diesel vehicles designed to cheat emissions tests. The collapse in VW sales came as sales of imported cars in South Korea rose 6% in October.

The BBC reported that Patrick McLoughlin, the transport secretary, had spoken to Herbert Diess, a senior VW executive who joined from BMW in July, and demanded compensation for UK drivers for any lower resale value of cars affected by the crisis. VW has agreed that payments might have to be made.

Prof Andre Spicer, at Cass Business School, said the car market depended on trust because of the imbalance of expertise between the engineers who build them and the people who buy them.

“The market for VWs could easily turn into what economists call ‘a market for lemons’ – that is a marketplace where there are huge imbalances of information and customers are routinely suspicious of what sellers have on offer,” Spicer said. “This suspicion is likely to spread to other brands as consumers start to treat technical details as reliable as the fanciful car advertisements seen on television: they might make us feel good, but they don’t describe reality.” © Guardian News & Media Limited 2010

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