Government needs to address this with a range of support measures
It was encouraging that the UK car market grew by 1% in the key 74 plate change month of September to 275,239 units according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). This was the best performance since 2020 but still 19.8% off pre- COVID September 2019 figures.
A record number of 56,387 battery electric vehicles, up 24.4%, were registered, boosted by massive manufacturing discounts which is estimated to be £2 billion this year. However, growth across the market was driven by fleet purchases which were up by 3.7% and represented 54.2% of the overall market. Private consumer demand fell by 1.8% while the small business sector’s volume fell by 8.4%.
The concerns which I have previously expressed about the lack of private buyers for used EVs persist. The impending significant increase in supply of used EVs is particularly worrying and will lead to a further drop in used vehicle valuations. This in turn will result in greater depreciation for new vehicles, making it harder for leasing companies to fund the new EV market going forward.
Urgent government action is required to support the private buyer. In particular, charging infrastructure continues to be a significant hurdle for many buyers especially those without access to off street parking.
The SMMT has also called for:
- Temporarily halving VAT on new EV purchases to put more than two million new ZEVs (rather than petrol or diesel) on the road by 2028
- Scrapping the VED ‘expensive car’ tax supplement for ZEVs, due next year, to avoid penalising buyers
- Equalising VAT on public charging to match the 5% home charging rate, and mandating infrastructure targets to support those who cannot charge at home
- Maintaining and extending the business incentives that are working, including Benefit in Kind which supports company cars and those on salary sacrifice schemes, and the important Plug-in Van Grant
There also needs to be a major education programme for both the industry and for private vehicle buyers.
Author: Ian Hare, Managing Director, Motor Management
