Largest decline for UK new-car market in over two years
05 November 2024
Alongside the presentation of the Autumn Budget, October saw the UK new-car market suffer its worst performance since July 2022. Tom Hooker, Autovista24 journalist, analyses the result.
A total of 144,288 new cars took to the UK’s roads last month, a year-on-year drop of 6%. According to figures from the automotive body, the SMMT, this was the market’s worst performance since July 2022. Last month marked the second registration decline since then, after a two-year-long growth streak was broken in August.
In the year to date, deliveries are up 3.3% to just under 1.66 million units. However, this was down from a 5.5% increase from January to July, before the market endured its first fall.
Struggling sectors in UK
Every new-car sector saw registrations slump last month in the UK. Fleet volumes dropped 1.7% compared to October 2023, with 86,701 deliveries. However, its dominant market share of 60.1% was up 2.7 percentage points (pp).
In the first 10 months of the year, fleet registrations rose 14.4% with 979,056 units. It captured 59% of the market in this period, up from 53.3% at the same point last year.
Meanwhile, the private sector suffered an 11.8% slump in October, equating to 54,853 deliveries. It accounted for 38% of the new-car market, down from the 40.5% share recorded 12 months ago.
Private registrations dropped 9.6% in the year to date, to 643,469 units. This gave the sector a 38.8% market share, down 5.6pp compared to the same period in 2023.
Business deliveries endured a 12.8% decrease last month, the sharpest drop of the three sectors. However, this only resulted in a 0.1pp market share loss, falling to 1.9%. From January to October, registrations declined by 4.9%. The sector took a 2.2% share in this period, down 0.1pp.
Budget implications
Last week, the Autumn Budget was presented by the UK Chancellor of the Exchequer, Rachel Reeves. It committed £2 billion to the automotive industry over the next five years, supporting research and development, as well as capital funding. This includes zero-emissions vehicle (ZEV) manufacturing and the supply chain.
It aims to provide the long-term certainty that the industry needs to invest in advanced, greener technologies.
‘The automotive industry – a growth-driving, decarbonisation-critical sector in rapid technological change – has monumental growth potential in the near and long term,’ said Mike Hawes, SMMT chief executive.
‘It was positive, therefore, that government reiterated its £2 billion commitment to automotive transformation funding as part of its modern industrial strategy, a commitment which promises to support the scaling up of manufacturing as we transition to net zero, digitalisation and automation,’ he continued.
National Insurance impact
Also laid out in the Budget were plans to increase the rate of national insurance contributions made by employers. Hawes believes this will add significant pressure to automotive companies.
Composed of more than 2,500 small and medium-sized enterprises (SMEs), the supply chain will be particularly affected. ‘At a time when SMEs are already challenged with finding the significant resource that net zero requires, we need to make things easier, not harder for them,’ he said.
Hawes also noted that next year’s spending review, planned for spring 2025, ‘must find the funds to help our supply chain remain competitive and able to invest in its future in the UK.’
Elsewhere, the government said it would freeze fuel duty and extend a temporary 5p cut to 22 March 2026, costing £3 billion. This will save the average car driver £59 in 2025 and 2026.
No EV incentives
Not included in the Autumn Budget were any incentives for ZEVs or electric vehicles (EVs). Like Germany, the UK has not had purchase incentives for plug-ins this year. However, other major European automotive markets like France and Italy have. Meanwhile, Spain ended subsidies in July.
‘Manufacturers want to build close to where they sell and that’s one reason why strong domestic markets for ZEVs matter. These are the very vehicles that the government is compelling manufacturers to sell, so it is disappointing that the Budget was absent of any significant new stimulus for these markets,’ commented Hawes.
‘Continuing the company car tax benefits is welcome, but these alone are insufficient to generate the levels of private consumer demand that are mandated. Given this mandate amounts to the world’s most ambitious EV transition goals, it should be matched with equally ambitious purchase incentives.
‘Failure to support the market with the substantive measures needed not only puts the UK’s decarbonisation targets in serious doubt but risks reduced investment, with an impact on jobs and economic growth. An urgent review of market support and regulation is therefore crucial,’ stated Hawes.
BEV brilliance for UK
Yet, battery-electric vehicles (BEVs) were the only powertrain in October to enjoy growth. Deliveries increased by 24.5%, reaching 29,802 units.
It was the technology’s best performance of the year so far, narrowly edging out a 24.4% increase in September. This is its seventh double-digit increase in 2024 and continues a growth streak that has stood since December 2023. BEV's market share surged 5.1pp last month to 20.7%.
With 299,733 registrations, the powertrain was up 14.2% in the first 10 months of the year. This was the second-best growth of any drivetrain. It accounted for 18.1% of deliveries in this period, up from a 16.3% share between January and October 2023.
Puzzling PHEV performance
Plug-in hybrids (PHEVs) suffered a 3.2% registration decline last month, with 13,832 units. This was only its second drop this year so far, with the first in August. Yet, its share improved by 0.3pp to 9.6% in October.
In the year to date, deliveries increased 22.5%, with 138,775 units. PHEVs were the fastest-growing powertrain across the first 10 months of 2024. The technology captured 8.4% of the new-car market from January to October, up from 7.1%.
Combining BEV and PHEV volumes, the plug-in market surged 14.1% last month, reaching 43,634 registrations. EVs took a 30.2% share in October, rising 5.3pp. Deliveries were up 16.7% in the year to date, with 438,508 units. Plug-ins made up 26.4% of the market, an improvement from the 23.4% recorded one year ago.
However, Hawes thinks that more still needs to be done. ‘Massive manufacturer investment in model choice and market support is helping make the UK the second-largest EV market in Europe. That transition, however, must not perversely slow down the reduction of carbon emissions from road transport,’ he outlined.
‘Fleet renewal across the market remains the quickest way to decarbonise, so diminishing overall uptake is not good news for the economy, for investment, or the environment.
‘EVs already work for many people and businesses, but to shift the entire market at the pace demanded requires significant intervention on incentives, infrastructure and regulation,’ commented Hawes.
Painful petrol result
Petrol endured its worst performance so far this year in the UK. Deliveries of the powertrain slumped 14.2% in October, with 72,681 units. This result is particularly troubling as the SMMT includes mild hybrids in its petrol and diesel results.
This was its second double-digit decline of 2024, with the other occurring in August. The month marked the seventh consecutive drop for the drivetrain. Petrol’s market share fell 4.8pp year on year to 50.4%.
In the first 10 months of the year, the powertrain suffered a 1.8% decrease in registrations, with 888,925 units. It accounted for 53.6% of deliveries in this period, down from 56.4%.
Diesel’s double-digit decline
Diesel registrations slumped 20.5% in October, with 8,961 units. This was its third-worst performance of 2024 so far and its sixth month of double-digit decreases. The powertrain has endured declines every month so far this year. Diesel cars made up 6.2% of the new-car market in October, falling 1.1pp year on year.
In the year to date, diesel deliveries dropped 12.8% to 106,610 units. From January to October, the drivetrain’s share sat at 7.6%, down from 6.4% recorded in the first 10 months of 2023.
Combining petrol and diesel registrations, the internal-combustion engine (ICE) market plummeted 14.9% in October to 81,642 units. The powertrain grouping suffered a 5.9pp drop in market share to 56.6%.
With 995,535 deliveries, the ICE market declined 3.1% from January to October. Its share in the first 10 months of 2024 fell 4pp to 60%.
Hybrids registrations halted in UK
Full-hybrid (HEVs) registrations decreased by 1.6% in October. Despite being the second-best-performing powertrain in the month, it was the worst performance of the year so far for hybrids.
It was also its first drop since January, which recorded a 1.2% decline. Benefitting from other powertrain struggles, its share improved from 12.6% in October 2023 to 13.2% last month.
Year-to-date, hybrid deliveries were up 11.1%, with 224,339 units. The technology’s market share increased by 0.9pp to 13.5%.
Combining BEV, PHEV and HEV figures, electrified vehicles took a market share of 43.4% in October, up from 37.5% share 12 months ago. In the first 10 months of the year, the powertrain grouping accounted for 40% of registrations, up 4pp.
However, ICE still comfortably dominates new-car deliveries, 20pp ahead of the electrified market in year-to-date share.
