New car market growth continues

UK new car registrations grew for the 21^st consecutive month in April, rising by a modest 1.0% to reach 134,274 units, according to the latest data published by the Society of Motor Manufacturers and Traders (SMMT). As a result, this was the market’s best April since 2021, although uptake was still -16.6% below the pre-pandemic level in what is traditionally a low volume month following the March plate change.¹

SMMT

Continuing the trend seen throughout the year, growth was driven entirely by fleets, where registrations rose by 18.5% to reach 81,207 units – more than six in 10 of all new cars registered in April. Private buyer uptake fell by -17.7% to 50,458 units, while business registrations declined by -16.1%, to 2,609.

Electrified vehicles continued to be the main drivers of market expansion. Plug-in Hybrids (PHEVs) recorded the strongest growth, rising by 22.1% to account for 7.8% of the market, followed by Hybrid Electric Vehicles (HEVs), up 16.7% with a 13.1% share of demand. April was a brighter month for battery electric vehicle (BEV) registrations, predominantly due to compelling fiscal incentives for businesses. Overall, BEV uptake rose 10.7%, pushing up market share to 16.9%, a significant uplift on last April’s 15.4%.

While the overall increase in BEV demand is positive, urgent action is needed to re-enthuse private buyers into switching. Fewer than one in six new BEVs bought in April went to consumers, whose uptake volumes fell by -21.9%.² Drivers today enjoy the widest ever choice of BEV models – more than 100 – powered by the latest technology, and manufacturers continue to provide compelling offers to encourage their uptake. However, the lack of government incentives for private motorists remains a barrier that cannot be overcome by industry alone.

Given tax incentives are proven to deliver a rapid shift to BEVs in the fleet market, providing private buyers with a similar level of support would accelerate an overall market shift, fuel economic growth and deliver a sustainable, fair transition. Temporarily halving VAT on new BEV purchases would help more than a quarter of a million drivers to switch from fossil fuel to electric over the next three years. Similarly, altering the threshold for the ‘expensive car’ supplement to Vehicle Excise Duty – due to apply to EVs from April 2025 – would send the message to the market that zero emission vehicles are necessities, not luxuries.³

Action is also needed on infrastructure, with nationwide chargepoint installation essential for consumer confidence. While last year saw more chargepoints installed than ever before, there is currently just one standard charger available for every 35 plug-in cars on the road – a negligible improvement on 2022 when the ratio was one for every 36.⁴ With current levels of infrastructure insufficient to inspire more consumers to go electric, there is a clear need for measures to accelerate chargepoint rollout.

Such actions are crucial as, based on current conditions, the latest market outlook shows a diminishing share for BEVs despite a growing overall new car market. 1.984 million new cars are now anticipated to be registered in 2024 – a 4.2% rise on last year, and a 0.5% increase on January’s outlook. However, BEV volumes for this year have been revised downwards by -5.2%, with anticipated market share now 19.8%, significantly below the government target of 22% per manufacturer under the Vehicle Emissions Trading Scheme.⁵ While the scheme’s flexibilities mean manufacturers can still meet government mandated targets, long term success depends on a growing market built on strong consumer EV demand.

Mike Hawes, SMMT Chief Executive, said, “The new car market continues to grow even in the quieter months, driven primarily by fleet demand. This is particularly true of the electric vehicle sector, where the absence of government incentives for private buyers is having a marked effect. Although attractive deals on EVs are in place, manufacturers cannot fund the mass market transition single-handedly. Temporarily cutting VAT, treating EVs as fiscally mainstream not luxury vehicles, and taking steps to instil consumer confidence in the chargepoint network will drive the market growth on which Britain’s net zero ambition depends.”

Kim Royds, mobility director at Centrica, said: “EV production levels are at record rates – but driver demand is still lagging behind. To balance supply and demand, more work is needed to help drivers overcome the barriers to making the switch.

“Top of the list must be tackling the inequality between domestic and public charging infrastructure. If more people have access to a chargepoint, whether they have a driveway or not, it stands to reason that EVs will become more attractive to a greater portion of the population.

“Without doubt, continued collaboration and knowledge-sharing between vehicle manufacturers and energy providers is needed to provide charging solutions that are both affordable and accessible.”

Nick Williams, Managing Director, Lex Autolease, part of Lloyds Banking Group said: “Despite the economic environment, it’s encouraging to see electric vehicle sales continue to move in the right direction. That said, the overall production landscape looks set to be challenging this year and there is a requirement for everyone involved in the electric vehicle transition to help sustain consumer confidence. From affordability to charging, we know that people have concerns, so it’s no surprise to hear some question the industry’s ability to meet its zero emission vehicle targets.

“What’s needed now is certainty from government, especially about the essential incentives needed to encourage drivers to make the switch. Prioritising the rapid and fair roll out of charging infrastructure is vital too, as well as a clear communication strategy to provide authoritative, clear and trustworthy information on EVs.

“We recognise that the transition to a more sustainable future of transport to benefit us all is not easy.”

Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said: “New car sales recorded 21 consecutive months of growth in April. The marginal growth seen this month was supported entirely by an uptick of electric and hybrid vehicle sales. However, overall market share remains at 16% year-to-date so there is more work to be done.

“For manufacturers to reach their zero emission vehicle targets and for battery electric vehicles to occupy the roads, sales need to increase across the board. While sales of battery electric vehicles to large fleets increase, private retail demand is subdued.

“Private consumers will be looking for financial incentives to help them transition away from combustion engines. With the supply issues of the last few years now behind us, some manufacturers are starting to provide discounts through their retail networks in order to drive interest and grow sales.

“Lack of accessible electric vehicle charging infrastructure continues to be the biggest barrier for many looking to make the switch. While the amount of public charging points continues to grow, more needs to be done to accelerate this further and improve accessibility to the preexisting infrastructure.

“The used car market can also facilitate this, as one of the biggest issues in the uptake of battery electric vehicles alongside charging, is affordability. New proposals targeting this specific area, such as used car salary sacrifice schemes, can help stimulate growth.”