The UK’s new car market experienced a 1.9% year-on-year decline in November 2023, with 153,610 new registrations, according to the Society of Motor Manufacturers and Traders (SMMT). This marks the second consecutive monthly downturn, highlighting the challenges facing the automotive industry as it grapples with Zero Emission Vehicle (ZEV) mandate targets amid shrinking market demand. This downturn affects both private and fleet buyers, with private registrations falling 3.3% to 58,496 units (38.1% of the market) and fleet registrations dipping 1.1% to 91,993 units (59.9%). Business registrations saw a modest increase of 5.2%.
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Electric Vehicle Sales Surge Amidst Market Downturn
Despite the overall market contraction, Battery Electric Vehicle (BEV) registrations demonstrated remarkable resilience, surging by 58.4% to 38,581 units, capturing a 25.1% market share – the highest since December 2022. This growth, largely attributed to manufacturer discounts and incentives, exceeded ZEV mandate targets but prompted questions about the long-term sustainability of such growth.
Industry experts weighed in on the EV surge and the challenges ahead. Ian Plummer, commercial director at Auto Trader, cautioned that the current momentum hinges on improved consumer confidence and significant enhancements to the charging infrastructure. Similarly, Sue Robinson, CEO of the National Franchised Dealers Association, stressed the need for stronger government-industry collaboration to address economic and regulatory pressures impacting the broader automotive market.
Financial Pressures and Used Market Dynamics
The surge in EV sales has also brought financial pressures to the forefront. Toby Poston, director of corporate affairs at the British Vehicle Rental and Leasing Association (BVRLA), warned of the unsustainable depreciation costs faced by leasing companies, which account for two-thirds of BEV purchases. He emphasized the crucial link between a healthy new car market and a buoyant used EV market, advocating for government support in the used EV sector.
John Cassidy, managing director at Close Brothers Motor Finance, pointed to further headwinds facing consumer EV adoption, citing concerns about slow infrastructure development and the complexities of ZEV mandates. He underscored the urgent need for manufacturers and policymakers to address these issues to achieve the ambitious 2035 targets.
Regulatory Landscape and Economic Outlook
Experts emphasize the need for a pragmatic approach to regulation. Jamie Hamilton, automotive partner at Deloitte, advocated for a balanced ZEV mandate combined with effective consumer incentives. He also highlighted the significant influence of macroeconomic factors, such as inflation and consumer confidence, on EV adoption rates.
Looking ahead, Philipp Sayler von Amende, chief commercial officer at Carwow, expressed optimism about the future of EVs in the UK. He noted that BEV enquiries are at a 12-month high, bolstered by improved supply and attractive discounts. If this demand trajectory continues, he suggested, the UK could witness robust EV market growth into 2025.
The Road Ahead for the UK EV Market
As 2023 draws to a close, the SMMT emphasizes the significant challenges ahead. To meet the next ZEV mandate target in 2025, the BEV market share must increase by an additional 53%. This will require substantial investment in charging infrastructure, targeted consumer incentives, and much-needed support for the used EV market.
The future of the UK’s automotive market hinges on navigating these complex dynamics and fostering a collaborative approach between industry stakeholders and government bodies.
“UK new car market shrinks in November as EVs outpace targets” was originally created and published by Motor Finance Online, a GlobalData owned brand.
