The UK new automobile market has recorded its finest 12 months because the pandemic as a powerful December, up 9.8%, wrapped up the seventeenth month of consecutive development. 1.903 million new automobiles reached the highway throughout 2023 – a rise of 17.9%, in accordance with the newest figures from the Society of Motor Producers and Merchants (SMMT).

Development was pushed completely by fleet funding because the earlier 12 months’s provide constraints light and helped fulfil pent-up demand. Fleet deliveries rebounded by 38.7% 12 months on 12 months, whereas enterprise registrations, a small proportion of the market, fell by -1.5%. Personal shopper demand remained steady at 817,673 items after a powerful restoration in 2022, with value of residing pressures and excessive rates of interest constraining development. Whereas the general new automobile market stays -17.7% under pre-pandemic ranges,¹ the surge in uptake in contrast with the earlier 12 months noticed the worth of recent automobile gross sales bounce greater than £10 billion to round £70 billion, with 288,991 further automobiles reaching the highway.²

When it comes to car kind, consumers confirmed a continued desire for superminis, twin objective and decrease medium automobiles, which accounted for 29.8%, 28.6% and 28.2% of the market respectively. These three segments have been the preferred since 2013.

Because the business transitions away from fossil fuels, drivers continued to speculate closely in low and nil emission automobiles – which meant common new automobile CO2 fell by -2.2% to 108.9 g/km. Hybrid electrical automobiles (HEVs) recorded sturdy development, up 27.1% to succeed in a 12.6% market share. Plug-in hybrids (PHEVs) additionally loved a powerful 12 months, with a 39.3% improve in registrations to account for 7.4% of the market.

Battery electrical car (BEV) uptake reached a document quantity – up by nearly 50,000 items with 314,687 new registrations. Certainly, 2023 noticed extra BEVs attain the highway than in 2020 and 2021 mixed.³ BEV volumes really fell by -34.2% within the final month of the 12 months, however it is a reflection of an irregular December 2022 when vital numbers of orders have been in a position to be fulfilled within the month.⁴ The subsequent few months are additionally prone to be risky as a result of regulatory uncertainties which have beset the market over the previous few months – most clearly the last-minute deal on UK-EU Guidelines of Origin, which avoids tariffs on EVs however which has made planning troublesome.

General, BEVs accounted for one in six new automobiles registered in 2023, with the bulk taken by enterprise and fleet consumers who profit from compelling tax incentives.⁵ In distinction, one in 11 personal consumers selected a BEV.⁶ For the reason that finish of the Plug-in Automotive Grant in June 2022, the UK is the one main European market with no shopper BEV buy incentives – however it’s now additionally the one market with mandated minimal targets for brand new ZEV registrations.

With mainstream shopper demand flat, the business is asking on authorities to assist personal consumers by halving VAT on new BEVs for 3 years. This momentary lower would give personal customers entry to fiscal assist at a stage much like that loved by enterprise consumers, enabling producers to ship bigger volumes of zero emission automobiles. Mixed with a retention of the enterprise incentives which have already confirmed their worth in elevated EV uptake, the measure would speed up the UK’s market transition. Extra drivers would improve their current petrol or diesel automobile to a brand new zero emission different, widening the longer term provide of used electrical automobiles and making funding in chargepoint rollout much more compelling.

Over the previous 5 years, BEV uptake has risen nearly 20-fold, with the Treasury reaping a VAT windfall as a result of these automobiles usually having larger buy prices than their ICE counterparts.⁷ Halving VAT would give customers an estimated further £7.7 billion in BEV shopping for energy to the top of 2026, whereas decreasing the Treasury’s tax take by simply 22% per car for every further driver switching from an ICE to a BEV. This is able to encourage an additional 270,000 new automobile consumers in Britain to go electrical and put 1.9 million new EVs on the highway by the top of 2026.⁸ Such a step would have a profound impression on the UK’s carbon footprint, decreasing highway car emissions by greater than 5 million tonnes cumulatively over the subsequent three years.⁹

Mike Hawes, SMMT Chief Government, stated,

With car provide challenges fading, the brand new automobile market is constructing again with one of the best 12 months because the pandemic. Energised by fleet funding, notably within the newest EVs, the problem for 2024 is to ship a inexperienced restoration. Authorities has challenged the UK automotive sector with the world’s boldest transition timeline and is investing to make sure we’re a significant maker of electrical automobiles. It should now assist all drivers purchase into this future, with shopper incentives that may make the UK the main European marketplace for ZEVs.¹⁰

Looking forward to 2024, the newest market outlook – revealed in November – anticipates 2024’s new automobile market to succeed in 1.97 million items, with 439,000 BEVs taking a 22.3% market share. The subsequent quarterly revised outlook shall be revealed in February.

1 2019 registrations: 2,311,140
2 Based mostly on JATO common worth (£36,474)
3 298,932 BEVs registered in 2020 and 2021
4 BEVs achieved a document market share of 32.9% in December 2022, making them the preferred kind of automobile for the month
5 BEV massive fleet and enterprise = 77.1% of BEV volumes (in contrast with 57% of total market)
6 8.8% of personal registrations are BEVs – 1:11.4
7 2018: 15,510 BEVs registered; 2023: 314,687 BEVs registered. JATO common BEV value: £47,471. Common ICE value: £30,483 (1H 2023)
8 Based mostly on SMMT evaluation – assumed 65% of the market would profit from a VAT lower, lifting demand for that proportion by 25% (primarily based on 1% worth fall delivers 3% demand rise), elevating outlook for BEVs between 2024 and 2027 from a 1.67 million base to 1.94 million, a 270,000 unit rise
9 Based mostly on SMMT evaluation – 1.94 million X VAT saving (£3,956, primarily based on JATO common worth of BEV) = £7.7bn. CO2 saving primarily based on 1.5tCO2 saved per automobile pa by the 1.94 million new BEVs registered between 2024 and 2026.
10 As of the newest accessible ACEA European market knowledge, for November 2023, the UK is the second largest European BEV market by quantity and sixteenth by market share

SOURCE: SMMT