The UK new car market continued its upward trend in March, marking the 20th consecutive month of growth. However, a closer look reveals a tale of two segments: fleets driving the increase and electric vehicles (EVs) struggling to keep pace with the overall market.
According to the Society of Motor Manufacturers and Traders (SMMT), new car registrations rose 10.4% in March compared to the same month last year. This represents the best March performance since 2019, though it remains 30.6% below pre-pandemic levels.
The growth was fueled by a significant 29.6% rise in fleet registrations, a sector still recovering from supply chain issues that plagued previous years. Conversely, registrations by private buyers fell by 7.7%, likely due to a challenging economic climate characterized by low growth, weak consumer confidence, and rising interest rates.
While all fuel types saw some growth, petrol cars retained the dominant market share at 55.7%. Diesel vehicles continued their decline, accounting for just 7.3% of the market.
Hybrid electric vehicles (HEVs) were a bright spot, achieving record levels with a 19.6% increase, grabbing a 14.0% market share. Plug-in hybrids (PHEVs) saw even more impressive percentage growth, surging over a third to capture 7.7% of the market.
Here’s where the story for EVs gets concerning. While battery electric vehicle (BEV) registrations reached their highest ever in March, their market share actually dipped by one percentage point compared to last year, landing at 15.2%. Despite a 3.8% rise in registrations, only fleets showed any significant growth for BEVs.
The SMMT highlights this decline in BEV market share within a growing market as a clear sign that government support for consumer adoption is crucial. While large fleets continue to drive BEV uptake thanks to tax incentives, private buyers face a different situation. The tough economic climate makes it harder for them to invest in newer technologies, even with manufacturer incentives.
The SMMT argues that manufacturers alone cannot shoulder the responsibility of propelling the EV transition indefinitely. They propose a range of measures to incentivize private buyers, including temporarily halving VAT on BEVs, revising the expensive car supplement threshold, and eliminating the “pavement penalty” on public EV charging by aligning VAT rates with home charging.
“Market growth continues, but a sluggish private market and shrinking EV market share show the challenge ahead,” said Mike Hawes, SMMT Chief Executive. “Government support for private consumers would send a positive message and deliver a faster, fairer transition on time and on target.”
The UK car market’s growth is positive news, but the slowdown in EV adoption poses a significant challenge for the country’s carbon reduction goals. Whether the government heeds the SMMT’s call for broader consumer incentives remains to be seen, but one thing is clear: a successful transition to electric mobility requires a multi-pronged approach that goes beyond just fleet purchases.
