Two straight years of growth for new car market

The UK new car market rose by 2.5% in July, delivering two years of consecutive growth, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). With 147,517 new cars reaching the road, it was the best performance for July since 2020, when a re-opening of dealerships following four months of lockdown saw a surge in deliveries to fulfil demand pent-up demand.¹

As has been the pattern for the year, July’s growth was sustained entirely by the fleet sector, which recorded a 13.0% increase in registrations to achieve a 62.0% market share. Private demand continued to diminish, falling by -11.1% to account for 36.2% of deliveries in the month, although the growing popularity of salary sacrifice purchasing will contribute to this decline.

Electrified vehicle demand outpaced the overall market, accounting for four in 10 (42.0%) new cars registered in the month. Hybrid electric vehicle (HEV) uptake increased by 31.4% to achieve a 14.5% market share, while plug-in hybrids (PHEV) grew 12.4% to take 8.9% of registrations. Battery electric vehicle (BEV) volumes, meanwhile, were up 18.8%, resulting in an overall market share of 18.5%. While the private share of the BEV market continues to fall – 17.2% went private buyers, compared with 20.3% last year – private BEV volumes did increase by a marginal 0.9%. Overall, BEVs account for 16.8% of the new car market, year to date.

With zero emission vehicles mandated to comprise a minimum 22% of each brand’s new car registrations over the full year, the pace of transition needs to increase significantly. The latest industry outlook², however, suggests that such a surge is looking increasingly unlikely given the current market conditions. While the outlook anticipates overall market growth in 2024, expectations have been revised downwards since April,³ with 1.968 million new car registrations now forecast by the end of the year. The anticipated BEV share of the market has also been revised downwards to 18.5% from the 19.8% expected in April. Last week’s interest rate cut was already ‘priced in’ to the latest outlook but further cuts would be welcome, helping reduce the costs of finance and making new car purchases more accessible to more consumers.

Mike Hawes, SMMT Chief Executive, said, “Two years of new car market growth against a backdrop of a turbulent economy is testament to the sector’s resilience and the attractiveness of the deals on offer. Weakening private retail demand, however, particularly for EVs and despite generous manufacturer discounts, is the over-riding concern. More people than ever are buying and driving EVs but we still need the pace of change to quicken, else the UK’s climate change ambitions are threatened and manufacturers’ ability to hit regulated EV targets are at risk. Achieving market transition at the pace demanded requires greater support for consumers and, with the all-important new numberplate month of September beckoning, action on incentives and infrastructure is needed now.”

In response to the SMMT New Car figures, Ian Plummer, Commercial Director commented:  
“Overall, July marked another lacklustre month for the new car market, as the strong performance in fleet channels struggled to offset the ongoing retail decline.

“The bright spot is a strong consumer move to low emission cars, which so far this year have accounted for almost half of all new car sales, up from around just one in ten in 2019.

“Manufacturers are also working hard to tempt buyers with enticing offers, as shown by a 20% rise in new car advert views on our platform in July. That offers some optimism as we approach the key plate change month of September.”

¹ July 2020: 174,887 units
² SMMT outlook
³ SMMT outlook, April 2024