The UK new car market continued its upward trend in May, marking its 22nd consecutive month of growth, according to figures released by the Society of Motor Manufacturers and Traders (SMMT). Overall registrations rose by a modest 1.7%, reaching 147,678 units – the best May performance since 2021, albeit still nearly 20% down on pre-pandemic levels in 2019.
While the headline figure suggests a healthy market, a closer look reveals a tale of two sectors. Businesses and fleets were the main drivers of growth, with sales rising 14.0% and 9.5% respectively. This positive trend narrowly offset a concerning 12.9% decline in private retail sales.
However, there’s a bright spot within this decline. Battery Electric Vehicles (BEVs) defied the trend, experiencing a 6.2% increase in registrations and securing a record 17.6% market share, up from 16.9% in May 2023. This growth was primarily driven by the fleet sector, where BEV uptake surged by a significant 10.7%.
Private retail sales of BEVs, while falling slightly by 2.0% compared to May 2023, remained close to last year’s levels. This is a positive sign, but it falls short of the ambitious targets set by the government’s Vehicle Emissions Trading Scheme, which mandates a 22% zero-emission vehicle share for manufacturers this year.
The SMMT suggests that the current sales performance, while encouraging, is not enough to meet these targets. While manufacturers are offering a “plethora” of new electric models and “compelling offers” to incentivize purchases, relying solely on manufacturer discounts is unsustainable. The SMMT argues these discounts hinder investment in next-generation technologies.
Looking ahead to the upcoming general election, the industry body is urging the next government to prioritize consumer incentives to accelerate the transition to electric vehicles. Mike Hawes, SMMT Chief Executive, emphasizes the need for a “faster and fairer transition” that relies on “carrots, not just sticks.” Specifically, the SMMT proposes a temporary 50% VAT cut on new BEV purchases, alongside a reduction in VAT on public charging from 20% to 5%, aligning it with the rate for domestic electricity.
James Court, CEO of EVA England, an electric vehicle advocacy group, echoed these sentiments. He sees the rise in BEV sales to over 17% as a sign of “strong and maturing” consumer demand for electric cars. He added that EVA England members overwhelmingly report satisfaction with electric vehicles, suggesting a positive trend in driver experiences.
The UK car market finds itself at a crossroads. While the electric vehicle sector shows promise, sustained growth hinges on government support for private buyers. The upcoming general election presents an opportunity for a policy shift that could significantly accelerate the transition to a cleaner and more sustainable transportation system.
