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New car registrations

EVs energise new car market

Monday, November 7, 2022 - 08:17
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The UK new car market recorded a third month of growth in October, with registrations rising by more than a quarter (26.4%) to 134,344 units, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). Fulfilment of strong order books helped deliver the bounce-back, although the increase follows a particularly disappointing October 2021 when deliveries fell by -24.6%.1 In the year to date, the market is down -5.6% on the same period in 2021, but still a third below pre-Covid levels.2

Growth in October was driven primarily by large fleet registrations, which grew 47.4% to 67,911 units, while those by private buyers rose 7.4% to 62,714. Smaller businesses recorded a 108.6% increase although, at 3,719 units, this is a small segment of the market.

Zero emission capable car deliveries continued to grow in volume, with battery electric vehicle (BEV) registrations increasing by 23.4% to 19,933 and plug-in hybrids (PHEVs) by 6.2% to 8,899. However, BEV uptake grew by less than the overall market for the first time since the pandemic, meaning October is the first month to see BEV market share fall year on year since May 2021, primarily attributable to supply challenges.

Deliveries of hybrid electric vehicles (HEVs), meanwhile, rocketed 81.7% to account for more than one in 10 new cars, as supply was prioritised for a raft of popular new models. Overall, electrified vehicles accounted for one in three registrations, while more than a fifth (21.5%) came with a plug.

Ongoing supply chain shortages, surging inflation and a growing cost of living crisis have led to a -2.2% downward revision of the market outlook for the year, with 1.566 million registrations now anticipated. This puts 2022 on course to be the market’s toughest year since 1982.3 More positively, demand for electric vehicles is anticipated to result in a plug-in market share of 21.9%. Overall market recovery is anticipated to continue through 2023, with an outlook of 1.808 million units and plug-ins accounting for 26.7% of registrations next year.

Such growth underlines the importance of increasing public chargepoint provision. At the start of October 2022 the UK had 34,637 public standard, rapid and ultra-rapid electric vehicle charging devices, with 1,239 new rapid chargers and 5,023 new standard chargers installed during the first nine months of the year. With 249,575 new plug-in registrations during the same period, just one new standard public charger has been installed for every 50 new plug-in EV registrations. At this rate, it is unlikely that government’s ambition for 300,000 public chargers by 2030 will be met.4

Mike Hawes, SMMT Chief Executive, said, “A strong October is hugely welcome, albeit in comparison with a weak 2021, but it is still not enough to offset the damage done by the pandemic and subsequent supply shortages. Next year’s outlook shows recovery is possible and EV growth looks set to continue but, to achieve our shared net zero goals, that growth must accelerate and consumers given every reason to invest. This means giving them the economic stability and confidence to make the switch, safe in the knowledge they will be able to charge – and charge affordably – when needed. The models are there, with more still to come; so must the public chargepoints.”

With stretched infrastructure and the cost of living crisis both having the potential to undermine future uptake, government’s Autumn Statement, set for 17 November, provides an opportunity to stimulate demand and deliver both economic growth and net zero progress. Further measures to mitigate energy costs in the longer term for consumers and businesses would give greater confidence. Now is not the time to raise motorists’ costs, which would likely stoke inflation and damage broader government revenues from new car sales. A long-term fiscal commitment to zero emission motoring would do much to stimulate investment and demand. EV drivers’ top complaints are, invariably, cost and charging anxiety so reducing VAT on public charging to bring it into line with home charging would level the playing field for drivers unable to install a home chargepoint.

Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said: “New car registrations grew in October by 26.4% compared to the same period last year, marking a third consecutive month of growth. Whilst sales might typically dip following a new plate month, October’s sales growth was seen across both fleet and private sales – increasing by 47.4% and 7.4%, respectively.

“The figures come at a time of rising interest rates – the base rate reaching 3% just this week – making the cost of financing a new car more expensive, and could soften demand as many consumers delay major purchases. This also comes as manufacturers start to emerge from the microchip shortage and supply chain issues.

“According to the Deloitte Consumer Tracker, just 4% of consumers plan to purchase a car between now and the end of the year.

Electric vehicle demand remains strong

“Demand for electric vehicles continues to remain strong, with volumes up 23.4% compared to October 2021, and reaching a market share of 14.8%. These figures reflect a market with greater selection of vehicles and improved battery range, and also mark growing consumer confidence in charging infrastructure – albeit there is still a long way to go. However, with fuel prices also remaining high, this will undoubtedly be a key consideration for those consumers considering a switch.

“Until recently, financial incentives were also a major factor in consumers’ decision to move across to electric. For the time being, benefit-in-kind taxes still offer significant cost savings for those who can access an EV via their company car scheme.”

Jon Lawes, Managing Director, Novuna Vehicle Solutions: “Despite a myriad of challenges affecting the automotive sector, uptake of electric vehicles continued to accelerate throughout October. However, with a cost of living crisis intensifying and a recession now all but imminent, the industry faces tough months ahead.

“Yet, as COP 27 will remind us of next week, the economic challenges we face tomorrow will be many times worse than those we face today if we don’t face up to climate reality. For all of the immediate priorities the Chancellor has to grapple with in the upcoming Autumn Statement, it’s imperative the Government remains steadfast in its conviction to support the transition to zero emission mobility by accelerating the rollout of EV charging infrastructure and finally providing much needed clarity for corporate fleets on BIK rates beyond 2025.”

Kim Royds, EV Director at British Gas, said: “Despite ongoing supply chain disruptions continuing to stall the availability of new models, another consecutive month of growth in EV registrations is a positive step as the UK accelerates along the road to zero.

“Widespread adoption of EVs is dependent on the supporting charging network being easily accessible and able to withstand the increased demand. Tackling charging challenges – both at home and in public spaces – is critical if the UK is to stay ahead of the electrification curve and ensure that nobody is excluded from EV ownership.”

Karen Johnson, Head of Retail & Wholesale at Barclays Corporate Banking, said: 

“Last month’s registration figures are better than expected amidst the current economic churn as the fulfilment of previous order books and continued demand for new vehicles boosted car dealers in October. Although UK production figures have fallen in recent months, consumers are clearly lapping up what is available.

“The continuing strength of demand for new cars will be a significant unknown for the UK motor industry in the months ahead, but whatever happens dealers will be focussed on making sure that any consumer appetite is suitably fed.”

Commenting on the latest figures from the SMMT, Meryem Brassington, electrification propositions lead at Lex Autolease said: “2022 is set to represent another record year for EV uptake, with vehicle registrations well on track to surpass the 190,000 registered last year alone. The figures demonstrate real sustained progress along the UK’s electrification journey and paint a promising picture for achieving net zero.

“However, supply chain issues and economic uncertainty continue to present challenges for the market. To ensure that the momentum we have built doesn’t stall, fleet managers must be given the confidence they need to make the switch to electric. All eyes will be on the Chancellor’s autumn statement this month in the hope that he will provide a long-awaited update on company car tax tables beyond 2025 to give businesses the cost clarity to make long-term decisions.”

Chris Evans, Head of Sales at heycar, says:  “Rising interest rates and the highest mortgage rates that we’ve seen in 14 years are making consumers far more cautious when it comes to their next big purchase.

“In conversations with our dealer partners during the past month, we know that stock is sticking to forecourts for longer than it has done compared to the rest of the year. In some areas it is becoming apparent that stock is clearly taking longer to be sold, with dealers advising of strong pricing actions being required.

“EV demand has been dented by uncertainty around energy prices and the scrapping of the two-year price guarantee. However, while EV leads are down 21% compared to October last year, demand for petrol and diesel has increased by a respective 52% and 19%. Hybrids are also up 63% on the same month in 2021.

“Large and practical cars have been among the most popular in October. Based on the number of leads that we are sending to our dealer partners, demand for SUVs is up 43% on October 2021, while estate cars have also experienced an uptick with demand up 49%. This suggests that demand for large and practical family vehicles is as strong as ever.

“Most dealerships predict they will be able to weather this storm, as no new car stock and steadfast used car pricing means that dealer profits will remain strong despite the recent economic downturn. If the Government and the newly appointed Prime Minister can tackle the huge job of boosting consumer confidence, the market in 2023 should be in a better state than it will be after a difficult end of year.”

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