SMMT: Fresh car marketplace maintains stability as fleets boost expansion

Great Britain’s new automobile marketplace continued its growth for the 22nd month in a row with a 1.7% rise in registrations in May, based on the most recent data from the Society of Motor Manufacturers and Traders (SMMT). Achieving 147,678 units on the roads, this was the most exceptional May market performance since 2021, despite being 19.6% lower than in 2019.¹

Market expansion was mainly driven by fleets and businesses, with a 14.0% and 9.5% increase respectively, which nearly balanced out a 12.9% decrease in private retail sales. While both petrol and diesel vehicle deliveries dropped, there was an increase in demand for electrified automobiles, especially plug-in hybrids (PHEVs) which experienced the highest growth among powertrains, soaring by 31.5% to capture an 8.0% market share. Hybrid cars (HEVs) saw a 9.6% rise, maintaining their status as the third most popular fuel type after petrol and battery electric, accounting for 13.2% of the market.

Registrations of Battery Electric Vehicles (BEVs) also surpassed the overall market growth, elevating by 6.2% to secure a 17.6% market share, up from 16.9% the previous year. Fleet sector uptake was the primary driver of this increase, with a 10.7% rise in volumes. Conversely, private retail BEV registrations dropped by 2.0% (just 98 registrations lower than May the previous year). Though this performance is encouraging, it falls short of the targets set by the government in its Vehicle Emissions Trading Scheme, where each brand is required to ensure that 22% of new vehicle sales this year are zero-emission. With over 100 EV models² now accessible and various attractive promotions³, manufacturers are committed to propelling change, yet achieving these goals will necessitate additional support.

Prolonged manufacturer discounting is unsustainable as it impairs companies’ capacity to invest in future technologies. This market performance underscores the necessity for the upcoming government to offer meaningful purchase incentives to private consumers.

While specific private purchasers may access some of the advantages enjoyed by business buyers through salary sacrifice schemes, implementing universal access to incentives would significantly boost BEV adoption rates and quicken the decarbonization of road transportation. Temporarily slashing VAT on new BEV acquisitions by half, coupled with lowering VAT on public charging stations from 20% to 5%, in line with domestic usage, would propel demand, resulting in over a quarter of a million EVs on the roads instead of petrol or diesel-driven cars within the next three years.⁴

Mike Hawes, Chief Executive of SMMT, remarked,

During the lead-up to next month’s general election, the new car market has consistently held its ground as significant fleets continue to drive expansion, counterbalancing weakened interest from private retail buyers. Consumers now have access to a wide array of new electric models and compelling offers, but manufacturers cannot solo sustain such significant support indefinitely. Their accomplishments thus far should serve as a beacon for the next government, indicating that a swifter and more equitable transition necessitates incentives alongside regulations.