The UK new car market has hit the half-year million motors mark for the first time in five years, after new car registrations rose in June by a modest 1.1% to reach 179,263 units, according to figures published by the Society of Motor Manufacturers and Traders (SMMT).
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So far in 2024, 1,006,763 new cars have been registered in the UK, up 6.0% on the previous year but still down 20.7% on 2019.
Once again, June’s market growth was driven primarily by the fleet sector, where uptake rose by 14.2%, while private retail demand fell for the ninth consecutive month, down 15.3%. Retail buyers accounted for fewer than four in 10 new cars registered (37.7%).
Electrified vehicle uptake continued to grow in the month of June, with plug-in hybrid (PHEV) volumes up 30.0% to reach a 9.3% market share, while hybrid electric vehicles (HEV) rose 27.2% to achieve 14.9% of the market. Both powertrains also outpaced battery electric vehicle growth (BEV), which rose 7.4% but took its highest monthly share this year, accounting for 19.0% of all new vehicle registrations.
The SMMT noted that the UK’s zero emission transition – and the ability of manufacturers to meet the requirements of the Vehicle Emissions Trading Scheme – currently relies heavily on the fleet sector as private consumer uptake continues to be weak.
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By GlobalDataPrivate BEV car sales have fallen 10.8% year-to-date, with fewer than one in five new BEVs going to private buyers. Overall, BEVs now comprise 16.6% of the new car market so far this year, slightly above the 16.1% achieved in the same period last year, with uptake running behind the levels mandated by the UK government.
GlobalData forecasts the UK car market will grow by around 3% to 2m units in 2024. That would follow an 18% rebound in 2023 as supply constraints caused by the global semiconductors crisis eased.
See also: UK car output ‘struggling’ – analyst
With the UK heading to the polls in a General Election today, the UK automotive industry called on the next government to provide greater support to the consumer on the journey to zero emission mobility. It said re-instating fiscal incentives for the private consumer by way of a halving of VAT on BEVs for three years would re-energise the market, putting an additional 300,000 private BEVs – rather than petrol or diesel cars – on the road over the next three years, on top of current outlooks. This, SMMT maintains, would help ensure that in 2035, half of all cars in use would be zero emission, cutting road transport CO2 emissions by 175 million tonnes between now and then.
SMMT also said Vehicle Excise Duty (VED) plans should also be revised so zero emission vehicles (ZEVs) are classed as essential rather than ‘luxury’ vehicles, by amending the ‘expensive car’ supplement due to be applied from next April. In addition, public charge point use could be made fairer by reducing VAT from 20% to 5%, in line with home charging – a move that would support ZEV uptake and send the right message to consumers.
Mike Hawes, SMMT Chief Executive, said: “The year’s midpoint sees the new car market in its best state since 2021 – but this belies the bigger challenge ahead. The private consumer market continues to shrink against a difficult economic backdrop, but with the right policies in place, the next government can re-energise the market and deliver a faster, fairer zero emission transition. All parties are agreed on the need to cut carbon and replacing older fossil fuel based technologies with new electrified powertrains is the essential step to achieving that goal.”
GlobalData analyst Jonathon Poskitt told Just Auto: “The UK car market pace this year points to a continuing moderate recovery. Interest rates are still at historically high levels, although they are expected to edge down significantly later this year.
“Weak private buyer demand is a real concern though, particularly as fleets hit high renewal rates for electrified vehicles.”
Richard Peberdy, UK Head of Automotive for KPMG, also highlighted the over-reliance on fleet sales and the need to boost electric car sales in the face of mandated targets. He said: “New car sales are above levels seen this time last year, with fleets continuing to be the driver of growth in the market.
“The industry has its eyes firmly on the outcome of the election and what that means for automotive policy and attracting continued and further investment over the coming years.
“Increasing new electric vehicle sales is imperative to UK car makers, who are now mandated to ensure that annually increasing percentages of the cars that they manufacture are electric. Increasingly players in the industry are talking about how this is best achieved, including the likes of increased incentives for consumer purchases of new EVs. Incentivising businesses to make new EV purchases has been a key contributor to growing UK EV sales in recent years.”
