UK new-car market completes two years of consecutive growth

07 August 2024

July marked 24 months of consecutive growth for the UK’s new-car market. However, one sector has been largely responsible for this positive trend. Autovista24 editor Tom Geggus assesses the figures.

With 147,517 registrations in July, the UK’s new-car market grew by 2.5% year on year. The Society of Motor Manufacturers and Traders (SMMT) confirmed this was the best performance in the month since 2020. Four years ago, registrations surged when dealerships were able to reopen their doors after four months of lockdowns.

‘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,’ said Mike Hawes, SMMT chief executive.

Weak retail demand in UK

Despite this success, Hawes acknowledged that weak retail demand is an over-riding concern for the UK automotive industry. Private registrations fell by 11.1% last month, with a volume of 53,356 units equating to a 36.1% share of the new-car market. This is some distance behind its 41.7% share in July 2023.

Private uptake was only slightly ahead of the sector’s 11.9% year-to-date decline, with 436,235 deliveries. The channel made up 37.8% of deliveries from January to July, compared to its 45.3% hold of the market during the same period last year.

‘Private demand continues to trail behind fleet, highlighting the urgent need to restimulate the private electric market and an important consideration for the new government,’ commented Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA).

Reaching only 2,640 registrations, business registrations dipped by 9.3% in July, claiming a market share of 1.8%. These results were down on the first seven months of 2024, with registrations dropping by 1.6% and the channel accounting for 2.3% of all deliveries.

This year has seen a stable performance from the business sector compared to 2023. Its July market share was 0.2 percentage points (pp) higher than 12 months ago. In the year to date, the sector only posted a 0.1pp improvement year-to-date.

Fleets were once again responsible for new-car market growth with 91,521 registrations last month, up 13% on July 2023. This meant the sector accounted for 62% of deliveries. This was some distance ahead of its 56.3% share from one year ago.

In the year to date, this channel saw an even greater registrations growth of 21%. However, fleets represented a slightly smaller percentage of the UK new-car market at 59.9%. This was a 7.6pp increase on its share during the first seven months of 2023.

ICE figures melt

Looking at the powertrain figures, cars powered by internal-combustion engines experienced a negative July.

Registrations of petrol models were down 5.9% year on year to a total of 76,879 units. This equated to a market share of 52.1%, down 4.7 percentage points (pp) from July 2023. In the year to date, the powertrain posted 630,966 units, up 1.5%. Its share fell by 2.1pp to 54.7%.

Diesel also continued to see falling rates of popularity, recording only 8,708 registrations last month, down 21.9% year on year. Its grip on the market fell to 5.9% in July, down 1.8pp. In the first seven months of the year, 74,928 diesel models were delivered to customers, dropping 13.3% compared to the same period in 2023. The powertrain accounted for 6.5% of registrations, down 1.4pp.

The SMMT also combines mild-hybrid (MHEV) registrations into their respective ICE powertrain categories. This underscores the waning demand faced by petrol and diesel-powered cars, even when supported by mild electrification.

Two in five

On the other hand, the SMMT highlighted the success of the remaining electrified drivetrains in July. Combined, battery-electric vehicles (BEVs), plug-in hybrids (PHEVs) and full hybrids (HEVs) made up two in five registrations in the UK last month.

HEVs recorded the largest growth in deliveries last month across all powertrains, surging 31.4% with 21,446 units. This meant the technology accounted for 14.5% of the UK’s new-car market. This was up from a share of 11.3% in July 2023.

In the first seven months of the year, HEV registrations increased by 17.1%, reaching 159,284 units. The powertrain accounted for 13.8% of the new-car market in this period, up 1.4pp.

Up 18.8% year on year, the UK saw 27,335 BEVs delivered in July. Accounting for 18.5% of the market, the all-electric technology saw its share increase by 2.5pp compared to 12 months ago.

This spike in popularity was evened out in the year to date, as the powertrain accounted for 16.8% of registrations, up 0.7pp. BEVs also recorded double-digit volume growth in this timeframe, with 194,431 units up 10.5%.

Meanwhile, PHEVs accounted for 8.9% of deliveries last month, up by 0.8pp. With 13,149 units taking to the road, the technology recorded growth of 12.4%.

Plug-in hybrids saw the biggest improvement between January and July, posting an increase of 28.2% thanks to 94,671 units. The powertrain made up 8.2% of registrations, increasing by 1.4pp.

Combined as electric vehicles (EVs), BEVS and PHEVs made up 27.4% of the new-car market in July, up from 24.1% a year ago. In the year to date, these plug-in models accounted for a quarter of all registrations, rising 2.2pp.

Targets loom

‘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,’ Hawes commented.

‘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,’ he added.

Under the ZEV mandate, 22% of manufacturers’ new-car sales must come from zero-emission vehicles (ZEVs) by the end of 2024. This increases to 28% in 2025, 33% in 2026, and 38% in 2027. By 2028 the required percentage will be 52%, then 66% in 2029 and 80% in 2030.

‘It is encouraging to witness another month of continuous growth in the EV market. However, the overall market share of BEVs, now at 16.8%, still falls short of the 22% required by the zero-emission vehicle mandate. This is an important consideration for the new government, particularly as they aim to reinstate the 2030 phase-out date of ICE vehicles,’ Robinson concluded.