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UK's New Car Market Surpasses Million Motors Milestone With Electric Vehicle Boost
The UK new car market has reached a significant milestone, surpassing the half-year million mark for the first time since 2019. June saw a modest increase of 1.1% in new car registrations, totalling 179,263 units, according to the Society of Motor Manufacturers and Traders (SMMT). This brings the total for 2024 to 1,006,763 new cars, reflecting a 6.0% rise from the previous year but still trailing by -20.7% compared to 2019.
Battery electric vehicles (BEVs) recorded their highest monthly market share since December 2023. However, their year-to-date uptake remains stable at 16.6%. Despite this growth, fewer than one in five new BEVs are purchased by private buyers. The fleet sector has been crucial in driving this transition as private consumer interest wanes.
Electrified vehicle sales continued to grow robustly in June. Plug-in hybrid electric vehicles (PHEVs) saw a 30.0% increase, capturing a 9.3% market share. Hybrid electric vehicles (HEVs) also rose by 27.2%, achieving a 14.9% market share. Both powertrains outpaced BEV growth, which increased by 7.4%, accounting for 19.0% of all new vehicle registrations.
The automotive industry is urging the next government to support consumers on the path to zero-emission mobility. Mike Hawes, SMMT Chief Executive, stated: "The year’s midpoint sees the new car market in its best state since 2021 – but this belies the bigger challenge ahead." He emphasised that with appropriate policies, the market could be revitalised and achieve a faster transition to zero emissions.
One proposed measure is reinstating fiscal incentives for private consumers by halving VAT on BEVs for three years. This could add an extra 300,000 private BEVs on roads over three years, reducing reliance on petrol and diesel cars and helping meet emission targets for 2035.
Policy Recommendations
The SMMT suggests revising Vehicle Excise Duty plans so that zero-emission vehicles are classified as essential rather than luxury items. This would involve amending the 'expensive car' supplement set to be applied from next April. Additionally, reducing VAT on public charge point use from 20% to 5%, aligning it with home charging rates, could further support ZEV uptake and send a positive message to consumers.
The fleet sector's uptake rose significantly by 14.2%, while private retail demand fell for the ninth consecutive month, dropping by -15.3%. Retail buyers accounted for fewer than four in ten new cars registered at just 37.7%. The industry's reliance on fleet sales highlights the need for stronger consumer incentives.
The UK's transition to zero emissions relies heavily on fleet purchases due to declining private consumer interest in BEVs. Private BEV uptake has decreased by -10.8% year-to-date, with less than one-fifth of new BEVs going to private buyers.
As the UK heads to polls today, there's an urgent call for government action to bolster consumer confidence and support zero-emission vehicle adoption through targeted fiscal policies and incentives.
This strategic approach aims to ensure that half of all cars in use by 2035 will be zero-emission vehicles, potentially cutting road transport CO2 emissions by up to 175 million tonnes within this period.
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