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The new car market in the UK saw a 2.5% increase in July, marking the second straight year of expansion, as per the most recent data from the Society of Motor Manufacturers and Traders (SMMT). A total of 147,517 new vehicles hit the roads, representing the best July performance since 2020, when a surge in deliveries facilitated by the reopening of dealerships following a four-month lockdown met pent-up demand.1
Consistent with trends for the year, July’s growth was entirely driven by the fleet sector, which saw a 13.0% increase in registrations, capturing a market share of 62.0%. Private demand continued to decline, dropping by -11.1% to represent 36.2% of deliveries in the month. Nevertheless, the rising popularity of salary sacrifice purchasing is expected to contribute to this downward trend.
Demand for electrified vehicles outpaced the overall market, accounting for 42.0% of new car registrations in July. Hybrid electric vehicles (HEV) saw a 31.4% increase, securing a market share of 14.5%, while plug-in hybrids (PHEV) experienced a 12.4% growth, claiming 8.9% of registrations. Battery electric vehicles (BEV) volumes surged by 18.8%, resulting in an overall market share of 18.5%. Although the private share of the BEV market decreased – 17.2% were purchased by private buyers, compared to 20.3% the previous year – private BEV volumes showed a marginal 0.9% increase. BEVs now represent 16.8% of the new car market year-to-date.
With a mandatory requirement for zero-emission vehicles to make up at least 22% of each brand’s new car registrations throughout the year, the transition pace needs to accelerate significantly. However, the latest industry forecast suggests that achieving such a surge appears increasingly unlikely given the current market conditions. While the outlook predicts an overall market growth in 2024, expectations have been revised downwards since April,3, to a forecast of 1.968 million new car registrations by year-end. The expected BEV market share has also been adjusted downwards to 18.5% from the 19.8% initially projected in April. The recent interest rate reduction was already factored into the latest forecast, but further cuts would be beneficial in reducing finance costs and enhancing access to new car purchases for a broader consumer base.
Mike Hawes, Chief Executive of SMMT, expressed,
Achieving two years of new car market growth amid economic turbulence demonstrates the sector’s resilience and the appeal of the available deals. However, the primary concern remains the weakening private retail demand, particularly for EVs, despite generous manufacturer discounts. While more individuals are transitioning to and driving EVs than ever before, the pace of this shift needs to accelerate; otherwise, the UK’s environmental goals are jeopardized, and manufacturers risk failing to meet regulated EV targets. Facilitating the required market transition demands increased support for consumers, along with urgent action on incentives and infrastructure, especially with the crucial new number plate month of September fast approaching.
1 July 2020: 174,887 units
2 SMMT outlook, July 2024
3 SMMT outlook, April 2024
SOURCE: SMMT
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