Surprising double-digit growth for UK new-car market

07 March 2024


The UK’s new-car market sprung a surprise in February, as registrations bucked a recent trend by recording double-digit growth. Phil Curry, Autovista24 special content editor, analyses the numbers.

A total of 84,886 new passenger cars took to the country’s roads last month, a 14% rise compared to February 2023. According to figures from the Society of Motor Manufacturers and Traders (SMMT), this was the best February in 20 years. It was also the market’s 19th consecutive month of growth.

The numbers also reverse a slowdown in growth which began in July 2023. November, December and January all recorded single-digit improvements in registrations.

February is usually a lower-volume month, as customers wait to take advantage of the UK’s traditional plate-change in March. So last month’s gains are likely to boost optimism and hopes that growth will continue throughout the year.

Fleets first

However, breaking down the numbers by area of registrations may dent this optimism. Last month’s impressive growth was driven entirely by the fleet and business sectors. Fleet registrations in the UK grew by 25.2% year on year. Business deliveries improved by 15.5%, albeit on smaller numbers.

Meanwhile, private registrations declined by 2.6% in the month and represented just 33.7% of the total market. February is traditionally a volatile month due to the plate change in March, and the decline in private registrations is a smaller blow than the 15.8% drop recorded in January.

Deliveries to private buyers have not improved on year-on-year totals since October 2023, when the market recorded a 0.3% rise. Even before this period, fleet deliveries were largely responsible for registration improvements, driving the market forward with constant positivity.

The slowing decline may mean private figures will rise with the plate change in March. However, whether the sector returns to a period of sustained growth is yet to be seen.

All-electric comeback continues

Following a rocky end to 2023, the battery-electric vehicle (BEV) bounce back continued with 21.8% growth in February. A total of 14,991 all-electric units took to the road. The powertrain therefore accounted for 17.7% of all registrations, up by 1.2 percentage points year on year.

Across the first two months of 2024, BEVs recorded 35,926 deliveries, up 21.3% year on year. This equates to a 15.8% market share, up from 14.3%.

The strong start suggests that last year’s declines were the result of manufacturers delaying registrations into 2024. This was to ensure the extra units counted towards zero-emission vehicle (ZEV) mandate requirements.

This is the first year that the ZEV mandate targets come into effect. In 2024, 22% of manufacturer sales are required to come from ZEV models over the full year. While the UK’s overall market share sits below this at present, it is tracking in the right direction.

However, February’s results were again sustained by the fleet sector, with private BEV registrations only counting for fewer than one in five models delivered. It seems more needs to be done to attract consumers into all-electric cars.

The technology has hit a wall in the private sector, with early adopters all having committed to zero-emission motoring. Now, the difficult second stage of convincing drivers to commit to internal-combustion engine (ICE) powertrains, has begun.

The UK has no purchase incentives in place to make BEVs more appealing financially. The technology’s recent struggles in Germany, which removed business incentives in September 2023, and ended private subsidies abruptly in December, show how financial aid can boost the market.

BEVs budget blow

The SMMT has long called for VAT on BEVs to be halved. It also proposes taxation of the powertrain through vehicle excise duty (VED), set to be introduced in 2025, to be scrapped. Additionally, the body is lobbying for VAT on the public charging infrastructure to be reduced. This would bring it in-line with home charging, benefitting those unable to access off-street parking.

All-electric cars are currently exempt from VED, with rates based on CO2 emissions from vehicles. The SMMT estimates that from next year, the majority of BEV buyers will be hit with an additional £1,950 in costs.

Due to the more expensively priced powertrain pushing into the ‘expensive car’ category for VED, an additional supplement of £390 per annum will also be added in the second-to-sixth year of a car’s age.

Such costs are likely to drive private customers away from the technology, rather than make it more appealing. However, the Spring Budget, announced at the beginning of March, made no mention of any help in terms of BEV adoption.

‘Government has been keen to assure the UK automotive industry’s competitiveness, with support for EV development and manufacturing, but there is little to help consumer demand,’ commented SMMT chief executive Mike Hawes. ‘[The recent Budget announcement] is, therefore, a missed opportunity to deliver fairer tax for a fair transition.

‘Reducing VAT on new electric vehicles (EVs), revising vehicle taxation to promote rather than punish going electric, and an end to the VAT ‘pavement penalty’ on public charging would have energised the market. With both the government and industry having statutory requirements to deliver net-zero, more still needs to be done to help consumers make the switch,’ he added.

Petrol dominance continues

February’s new-car market was led by petrol once again. A total of 48,001 units were delivered in the month, up 13.3% over last year. The fuel held 56.5% of the market.

However, the UK integrates mild-hybrid (MHEV) models into its petrol and diesel results. This can skew the results against other European markets, where full hybrids (HEVs) and MHEVs are either split into separate categories or mixed together.

The gap between petrol and BEV, as the second-most-popular powertrain, was over 33,000 units, highlighting the work that all-electric technology must do to overtake ICE. Instead, all-electric models as well as HEVs and plug-in hybrids (PHEVs) are taking orders and market share from diesel-powered cars.

While petrol soared, diesel continued its decline, hitting a new low in February with just 4,995 registrations, down by 7.4% year on year. This equated to a market share of 5.9%, a drop of 1.4 percentage points.

Diesel was down by 9.2% across the first two months of 2024, while its market share sat at 6.3%, a drop from the 7.7% recorded at the same point last year. The powertrain is in a constant state of decline, and could end 2024 with the lowest share of the market, a position it narrowly avoided last year, with PHEVs taking that unfortunate accolade. 

Hybrid’s hustle

In terms of registration growth, PHEVs performed best with an increase of 29.1% year on year. However, this was based on lower totals, with 6,098 units delivered to customers. This was over 1,100 units more than diesel, but some way behind BEVs. PHEVs took a 7.2% market share in February, up 0.9 percentage points on the same month in 2023.

However, the powertrain has performed well over the first two months of the year, with a 30.4% registrations increase and 18,042 units delivered. Its market share currently sits at 7.9%, a figure higher than it achieved across the whole of 2023, and 1.2 percentage points higher than its share from January and February last year.

Both BEVs and PHEVs both recorded greater growth than the wider market average in February. Meanwhile, HEVs’ gains were below the overall figure, with 12.1% more passenger cars taking to roads. Its 10,801 units resulted in a 12.7% market share, a drop year on year of 0.2 percentage points.

In the year-to-date figures, HEVs seemed to struggle as BEVs and PHEVs improved. Full hybrids recorded a 3.3% rise in registrations, the lowest growth of all powertrains. Meanwhile, HEVs held 13% of the market, 0.9 percentage points down on the first two months of 2023.

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