In May, the UK new car market reached a milestone with its 22nd consecutive month of growth, recording 147,000 car registrations. According to the Society of Motor Manufacturers and Traders (SMMT), this reflects a 1.7% increase compared to the same month last year.
The growth is primarily driven by the rise in sales of battery electric and hybrid vehicles, although the total figures are still 20% below pre-pandemic levels witnessed in May 2019. This momentum showcases a significant shift towards new energy technologies in the automotive industry.
Overall Market Performance
May witnessed a 1.7% growth in car registrations, with 147,000 units recorded. This marks the best May since 2021, despite the figures remaining 20% below those of May 2019, prior to the pandemic.
The automotive market has been notably impacted by the adoption of new energy technologies, with electrified vehicle sales showing significant growth across various categories.
Battery electric vehicle (BEV) sales rose by over 6%, reaching 26,000 units and capturing 17.6% of the total market.
Electrified Vehicle Growth
The surge in electrified vehicles encompasses multiple segments, with plug-in hybrid vehicle sales increasing by 31%, now representing 8% of the market. Hybrid vehicle sales also saw a 10% rise, making up 13% of the market share.
Despite the overall growth in electrified vehicles, traditional petrol and diesel car sales have declined. Diesel sales continued to fall, and petrol car sales, although still constituting 55% of the market, saw a slight drop.
Interestingly, the latest data reveals a 2% decrease in electric car sales to private motorists year on year. Retail buyers now comprise less than a fifth of zero-emission vehicle sales.
Fleet Sales Dominance
The majority of electric vehicles are sold to fleet buyers rather than private consumers.
Fleet sales are primarily driven by large corporations, rental car firms, utility companies, government agencies, and small businesses, which benefit from company car tax breaks and salary sacrifice schemes.
This trend underscores the need for improved incentives and infrastructure to attract more private buyers to the EV market.
Challenges in Infrastructure
Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, highlighted the need for more public charging infrastructure to make electric vehicles more viable for consumers.
He asserted, ‘Currently, electric vehicles don’t appear to make sense for consumers, unless they can charge their cars at home overnight. As a result, there does need to be a push on creating more publicly available charging stations.’
The inadequate infrastructure continues to be a significant barrier to widespread EV adoption.
Consumer Hesitancy
Lisa Watson, director of sales at Close Brothers Motor Finance, noted that private buyers might be postponing their decisions in hope of new incentives post-general election or anticipating cheaper electric cars later this year.
She remarked, ‘Consumers still remain hesitant to switch to electric vehicles, as inadequate infrastructure and the cost of switching continue to hold back widespread adoption.’
Consumer hesitancy remains a pressing issue that needs addressing through better incentives and improved infrastructure.
Proposed Measures to Boost Adoption
SMMT Chief Executive Mike Hawes has called for a temporary halving of VAT on electric car purchases and a 75% cut in VAT on energy at public recharging points to support mass adoption of zero-emission vehicles.
He argued that without these measures, government quotas forcing manufacturers to hit 22% electric sales this year could lead to unsustainable discounting.
Colin Walker, head of transport at the Energy and Climate Intelligence Unit, emphasised the competitive nature of the market, stating, ‘This intense competition will continue to improve choice and bring down costs for British drivers. Rather than the war on motorists, this is a war for motorists.’
Future Outlook
The debate on facilitating the transition to zero-emission vehicles continues, with various stakeholders advocating for a balance of incentives and regulations to drive the market forward.
The growing competition among legacy carmakers like BMW, Mercedes, Kia, and Hyundai is expected to improve choice and reduce costs for British drivers.
This competitive environment is poised to make zero-emission vehicles more accessible and affordable in the near future.
The UK new car market’s continuous growth for the 22nd month underscores the significant shift towards electrification in the automotive industry. However, challenges such as inadequate infrastructure and consumer hesitancy must be addressed to sustain this momentum.
As the competition among manufacturers intensifies and proposed measures to boost adoption come into play, the future of zero-emission vehicles in the UK looks promising, paving the way for a more sustainable automotive market.
