The UK new car market marked its 22nd consecutive month of growth
as registrations rose 1.7% in May, according to the latest
figures from the Society of Motor Manufacturers and Traders
(SMMT). With 147,678 units reaching the road, it was the
best May market performance since 2021, although it remains down
some -19.6% on 2019.1
Fleets and businesses continued to fuel market growth, up 14.0%
and 9.5% respectively, narrowly offsetting a -12.9% decline in
private retail uptake. While deliveries of both petrol and diesel
cars fell, demand for electrified vehicles rose, with plug-in
hybrids (PHEVs) recording the highest growth of all powertrains,
up 31.5% to reach an 8.0% market share, and hybrids (HEVs) rising
9.6%, maintaining their status as the third most popular fuel
type after petrol and battery electric at 13.2% of the market.
Battery electric vehicle (BEV) registrations also outperformed
the market, rising 6.2% to claim a 17.6% market share, up from
16.9% in the same month last year. Uptake is still driven by
the fleet sector, where volumes rose 10.7%. Private retail BEV
uptake, meanwhile, fell by 2.0% (just 98 registrations short of
May last year). This performance, although encouraging, is still
below the trajectory mandated on manufacturers by government in
its Vehicle Emissions Trading Scheme, which demands 22% of new
vehicles sold this year by each brand must be zero emission. With
a choice of more than 100 EV models2 now
available, and a raft of compelling offers3,
manufacturers are dedicated to driving change, but meeting
targets will require more support.
Manufacturer discounting cannot be sustained indefinitely as it
undermines the ability of companies to invest in next generation
technologies. The market performance underlines the need
for the next government to provide private consumers
with meaningful purchase incentives.
While certain private buyers can access some of the benefits
enjoyed by business buyers through salary sacrifice schemes,
providing universal access to incentives would dramatically
increase BEV uptake and accelerate the decarbonisation of road
transport. Temporarily halving VAT on new BEV purchases, combined
with a cut in the VAT levied on public charging from 20% to
5% – in line with domestic use – would drive up demand,
putting more than a quarter of a million EVs on the road instead
of petrol or diesel cars over the next three years.4
Mike Hawes, SMMT Chief Executive, said, “As
Britain prepares for next month's general election, the new car
market continues to hold steady as large fleets sustain growth,
offsetting weakened private retail demand. Consumers enjoy a
plethora of new electric models and some very attractive
offers, but manufacturers can't sustain this scale of support on
their own indefinitely. Their success so far should be a
signpost for the next government that a faster and fairer
transition requires carrots, not just sticks.”
