First AFV drop since 2017 as UK new car market continues to decline

4 July 2019

The UK new car market has declined for a fourth consecutive month, with plug-in hybrid (PHEV) demand suffering significantly following the withdrawal of government grants.

Registrations of new cars in the country fell by 4.9% year-on-year in June, with 223,421 units sold, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). In the first half of the year, the new car market is down by 3.4% with 1,269,245 vehicles joining UK roads.

PHEV troubles

The month saw growth for petrol and battery electric vehicles (BEVs), up 3% and 61.7% respectively, but this was not enough to offset the continuing decline of diesel, which fell for the 27th month in a row, posting a drop of 20.5% in June. Significantly, PHEVs continued their recent downward trend, falling by a massive 50.4%, while hybrids (HEVs) also fell, by 4.7%.

The performance tipped overall demand for alternative fuel vehicles (AFVs) into negative growth for the first time since April 2017, undermining efforts to reduce emissions through fleet renewal of the latest ultra-low emission vehicles. This is despite ongoing investment, which has enabled manufacturers to offer British car buyers more choice than ever before with more than 350 models now available in the UK, 44 of them plug-ins.

The decline in the PHEV market started with the UK Government withdrawal of grants for consumers purchasing the vehicles. An updated grants package released last year means only BEVs now qualify for a £3,500 (€3,985) subsidy. Prior to that, grants had ranged from £2,500 to £4,500 (€2,847 to €5,124) depending on the distance a vehicle could travel on electric power only. Despite the fall in PHEV sales, which the Department for Transport believed would not succumb with the withdrawal of the grant, there are no plans to reinstate it.

Faltering demand

Demand fell in all sectors, with private registrations seeing a decline of 4.8%, while larger fleet and business registrations also fell, down 2.5% and 37.1% respectively. Declines were also seen across every vehicle segment, except Dual Purpose, which grew 9.1% in June and 7.3% year-to-date to take 22.6% of the market. Supermini remains the UK’s best-selling segment, however, making up 31% of all registrations in the first six months.

′Another month of decline is worrying, but the fact that sales of alternatively fuelled cars are going into reverse is a grave concern’, said SMMT chief executive Mike Hawes ′Manufacturers have invested billions to bring these vehicles to market, but their efforts are now being undermined by confusing policies and the premature removal of purchase incentives.

′If we are to see widespread uptake of these vehicles, which are an essential part of a smooth transition to zero emission transport, we need world-class, long-term incentives and substantial investment in infrastructure.’