SMMT Reveals 2.5% Growth for UK Car Market in July
The UK's new car market experienced a 2.5% increase in July, marking 24 consecutive months of growth, as the Society of Motor Manufacturers and Traders (SMMT) reported.
With 147,517 new cars hitting the road, this was the best performance for July since 2020, when the reopening of dealerships after a four-month lockdown led to a surge in deliveries to meet pent-up demand.
July's growth was primarily driven by the fleet sector, which saw a 13% increase in registrations and captured a 62% market share.
In contrast, private demand continued to decline, falling by 11.1% and accounting for 36.2% of monthly deliveries.
The increasing popularity of salary sacrifice purchasing schemes has contributed to the decline in private demand.
Surge in electrified vehicle demand
EVs outperformed the overall market, comprising 42% of new car registrations in July, while hybrid electric vehicle (HEV) uptake rose by 31.4%, achieving a 14.5% market share. Plug-in hybrid vehicles (PHEV) also grew by 12.4% to capture an 8.9% market share.
Battery electric vehicle (BEV) volumes surged by 18.8%, resulting in an overall market share of 18.5%. However, the private share of the BEV market continues to decline, with only 17.2% of BEVs purchased by private buyers, compared to 20.3% last year.
Despite this, private BEV volumes did increase by a marginal 0.9%. Year-to-date, BEVs account for 16.8% of the new car market.
Challenges in meeting zero emission targets
Despite the rise in BEV registrations, the transition to zero-emission vehicles is progressing slowly enough to meet mandated targets. Each brand must ensure that zero-emission vehicles make up at least 22% of their new car registrations for the year.
The latest industry outlook suggests that achieving this target is increasingly unlikely under current market conditions. While overall market growth is anticipated for 2024, expectations have been revised downward since April, with forecasts now predicting 1.968 million new car registrations by the end of the year. The expected market share for BEVs has been adjusted to 18.5% from the 19.8% projected in April.
The recent interest rate cut was factored into the latest market outlook, but further cuts would be beneficial as lower interest rates could reduce the cost of financing new car purchases, making them more accessible to a broader range of consumers.
Industry Insights and Future Outlook
Mike Hawes, SMMT Chief Executive, comments on the market's performance: "Two years of new car market growth against a turbulent economy is a 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 overriding concern," he adds.
"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 number plate month of September beckoning, action on incentives and infrastructure is needed now.
"The UK's new car market continues to grow, driven by fleet sales and increasing electrified vehicle registrations. However, meeting zero-emission targets remains a significant challenge.
"Further economic incentives and improved infrastructure are essential to maintain this growth trajectory and support the transition to electric vehicles.
"As the market prepares for the critical new number plate month of September, industry stakeholders call for immediate action to sustain momentum and achieve long-term sustainability goals."
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