The UK new car market experienced an overall 2.5% rise in July, marking two consecutive years of growth, according to the latest data from the Society of Motor Manufacturers and Traders (SMMT). This positive trend saw 147,517 new cars hit the roads, making it the best July performance since 2020, when dealership re-openings post-lockdown drove a significant surge in deliveries. As diesel sales dropped by 20%, the sale of Battery Electric Vehicles (BEV) increased by 19%. So far, in 2024, the UK has now bought almost 195,000 electric vehicles.
Fleet Sector Fuels Market Growth
This growth trend has been predominantly driven by the fleet sector, which recorded a robust 13% increase in registrations, capturing a substantial 62% market share. In contrast, private demand continued to decline, dropping by 11% to represent just 36% of July’s deliveries. The increasing popularity of salary sacrifice purchasing schemes has contributed to this decline in private demand. The ability to put an EV, insurance, maintenance and even some charging into a single payment that can have tax advantages, has proven hard to resist.
Electrified Vehicles Leading the Charge
Electrified vehicles have notably outpaced the overall market growth, constituting 42% of all new cars registered in July. Among these, Battery Electric Vehicles (BEVs) demonstrated a remarkable 18.8% increase, securing an 18.5% market share for the month. Although the share of BEVs purchased by private buyers fell from 20% last year to 17%, private BEV volumes did experience a slight 1% increase.
Hybrid Electric Vehicles (HEVs) saw a significant 31% rise, achieving a 15% market share. Plug-in Hybrid Electric Vehicles (PHEVs) also grew by 12%, accounting for 9% of registrations. Year-to-date, BEVs represent 17% of the new car market, underscoring a steady increase in their adoption.
The year on year change is significant, but questions still remain about how many rapid public chargers are being planned, installed and commissioned.
Mandated Transition and Future Outlook
The transition to zero-emission vehicles is mandated to reach a minimum of 22% of each brand’s new car registrations over the full year. However, the current pace suggests a need for accelerated growth to meet this target. The SMMT’s latest outlook has revised expectations for 2024 downwards, predicting 1.968 million new car registrations, with BEVs anticipated to make up 18.5% of this total, down from the previously expected 19.8%.
Economic Factors and Industry Challenges
Recent economic conditions, including an interest rate cut, have been factored into the SMMT’s latest projections. Further cuts could potentially lower finance costs, making new car purchases more accessible. Despite this, the weakening private retail demand, especially for EVs, remains a significant concern. Mike Hawes, SMMT Chief Executive, emphasised the sector’s resilience but highlighted the urgent need for enhanced consumer support and incentives to maintain the momentum of the EV transition.
Hawes stated, “More people than ever are buying and driving EVs, but we still need the pace of change to quicken. The UK’s climate change ambitions and manufacturers’ ability to meet regulated EV targets are at risk. Action on incentives and infrastructure is needed now, particularly with the all-important new number plate month of September approaching.”
Automotive Industry’s Economic Contribution
The automotive industry remains a cornerstone of the UK economy, contributing £93 billion in turnover and £22 billion in value added annually. It invests approximately £4 billion each year in research and development, supporting 198,000 manufacturing jobs and around 813,000 jobs across the wider industry. These roles are predominantly outside London and the South-East, offering wages approximately 13% higher than the UK average. The sector accounts for 12% of the UK’s total goods exports, with vehicles being exported to over 140 countries, generating £115 billion in trade through automotive imports and exports.
Detailed Analysis of July Car Sales by Fuel Type
According to the SMMT data, in July 2024, the number of new BEVs registered reached 27,335, a notable increase from 23,010 in July 2023. This demonstrates a growing trend towards electric vehicle adoption. HEVs also showed significant growth, with 21,446 units registered compared to 16,321 the previous year. PHEVs saw registrations rise to 13,149 from 11,702, while petrol and diesel vehicles saw varied trends with petrol maintaining a strong presence at 76,879 units, albeit slightly lower than the 81,740 in 2023, and diesel registrations falling to 8,708 from 11,148.
In conclusion, the UK’s new car market is steadily growing, with electrified vehicles, particularly BEVs, driving this positive trend. However, to meet the ambitious zero-emission targets, more aggressive measures and incentives will be crucial. The automotive industry’s role in the UK economy remains vital, and continued support and investment will be key to sustaining growth and achieving environmental goals. In 10 years, there will be no more petrol/diesel sales in the UK – so the trends recognised in the SMMT data make for positive reading.
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