The UK new car market rose by 2.5% in July, delivering two years of consecutive growth, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
With 147,517 new cars sold, it was the best performance for July since 2020, when a re-opening of dealerships following four months of lockdown saw a surge in deliveries to fulfil demand pent-up demand.
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However, growth was again skewed towards the fleet sector with demand from private individual buyers down again, too.
Sales for the fleet sector were 13% up in July and accounted for 62% of all new car sales in July. Private demand continued to diminish, falling by 11.1% to account for 36.2% of deliveries in the month.
Electrified vehicle demand outpaced the overall market, accounting for four in 10 (42.0%) new cars registered in the month. Hybrid electric vehicle (HEV) uptake increased by 31.4% to achieve a 14.5% market share, while plug-in hybrids (PHEV) grew 12.4% to take 8.9% of registrations.
Battery electric vehicle (BEV) volumes, meanwhile, were up 18.8%, resulting in an overall market share of 18.5%. While the private share of the BEV market continues to fall (just 17.2% went to private buyers, compared with 20.3% last year – private BEV volumes did increase by a marginal 0.9%). Overall, BEVs account for 16.8% of the new car market, year to date.
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By GlobalData
With zero emission vehicles mandated to comprise a minimum 22% of each brand’s new car registrations over the full year, the pace of transition needs to increase significantly, the SMMT said.
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.
Weak private retail demand an ‘over-riding concern’
Mike Hawes, SMMT Chief Executive, said: “Two years of new car market growth against a backdrop of a turbulent economy is testament to the sector’s resilience and the attractiveness of the deals on offer.
“Weakening private retail demand, however, particularly for EVs and despite generous manufacturer discounts, is the over-riding concern. More people than ever are buying and driving EVs but we still need the pace of change to quicken, else the UK’s climate change ambitions are threatened and manufacturers’ ability to hit regulated EV targets are at risk. Achieving market transition at the pace demanded requires greater support for consumers and, with the all-important new numberplate month of September beckoning, action on incentives and infrastructure is needed now.”
Richard Peberdy, UK Head of Automotive for KPMG, said: “New car sales are up on this time last year, with fleets continuing to be the driver of growth in the market. Benefit-in-kind and salary sacrifice incentives for business have been the major driver of growth in EV sales and market share for some time now. The evidence increasingly suggests that accelerating private EV sales may require similar incentivisation, particularly if the government is going to reinstate the 2030 end to new petrol and diesel vehicle sales.
“While choices in the new car market are improving, EV prices and the scale and rate of price depreciation when buying from new remain major barriers to convincing consumers to buy a new EV. Subsequently, many consumers that are looking to transition to an EV are deciding that the used EV market is a more attractive way to do that. Despite used EV sales growing, the higher rate of stock that is currently coming into the used market is still pushing the price of some models down even further.
“All of this context continues to pose big questions regarding how car makers will meet their Zero Emission Mandate targets.”
