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The UK new automobile market has recorded its finest yr for the reason that pandemic as a robust December, up 9.8%, wrapped up the seventeenth month of consecutive development. 1.903 million new vehicles reached the highway throughout 2023 – a rise of 17.9%, in response to the newest figures from the Society of Motor Producers and Merchants (SMMT)
The UK new automobile market has recorded its finest yr for the reason that pandemic as a robust December, up 9.8%, wrapped up the seventeenth month of consecutive development. 1.903 million new vehicles reached the highway throughout 2023 – a rise of 17.9%, in response to the newest figures from the Society of Motor Producers and Merchants (SMMT).
Progress was pushed totally by fleet funding because the earlier yr’s provide constraints pale and helped fulfil pent-up demand. Fleet deliveries rebounded by 38.7% yr on yr, whereas enterprise registrations, a small proportion of the market, fell by -1.5%. Non-public shopper demand remained secure at 817,673 items after a robust restoration in 2022, with price of dwelling pressures and excessive rates of interest constraining development. Whereas the general new automobile market stays -17.7% beneath pre-pandemic ranges,1 the surge in uptake in contrast with the earlier yr noticed the worth of recent automobile gross sales soar greater than £10 billion to round £70 billion, with 288,991 further automobiles reaching the highway.2
By way of automobile sort, consumers confirmed a continued desire for superminis, twin goal and decrease medium vehicles, 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 take a position 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 strong development, up 27.1% to succeed in a 12.6% market share. Plug-in hybrids (PHEVs) additionally loved a robust yr, with a 39.3% improve in registrations to account for 7.4% of the market.
Battery electrical automobile (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 truly fell by -34.2% within the final month of the yr, however this can be a reflection of an irregular December 2022 when vital numbers of orders had been capable of be fulfilled within the month.4 The following few months are additionally more likely to be risky because of the 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 tough.
General, BEVs accounted for one in six new vehicles 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 Because the finish of the Plug-in Automobile 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 spanking new ZEV registrations.
With mainstream shopper demand flat, the business is looking on authorities to help personal consumers by halving VAT on new BEVs for 3 years. This momentary lower would give personal customers entry to fiscal help at a degree just 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 present petrol or diesel automobile to a brand new zero emission various, widening the long run 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 because of these automobiles sometimes having increased 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 tip of 2026, whereas lowering the Treasury’s tax take by simply 22% per automobile for every further driver switching from an ICE to a BEV. This might 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 tip of 2026.8 Such a step would have a profound influence on the UK’s carbon footprint, lowering highway automobile emissions by greater than 5 million tonnes cumulatively over the following three years.9
Mike Hawes, SMMT Chief Government, stated,
With automobile provide challenges fading, the brand new automobile market is constructing again with the most effective yr for the reason that 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 can make the UK the main European marketplace for ZEVs.10
Waiting for 2024, the newest market outlook – printed 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 following quarterly revised outlook might be printed 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 sort of automobile for the month
5 BEV giant fleet and enterprise = 77.1% of BEV volumes (in contrast with 57% of general 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 price: £47,471. Common ICE price: £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% (based mostly 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, based mostly on JATO common worth of BEV) = £7.7bn. CO2 saving based mostly 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 information, for November 2023, the UK is the second largest European BEV market by quantity and sixteenth by market share
SOURCE: SMMT
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