SMMT: New automotive market delivers finest yr since 2019 as fleets gas development

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The UK new automotive market has recorded its finest yr because the pandemic as a robust December, up 9.8%, wrapped up the seventeenth month of consecutive development. 1.903 million new vehicles reached the street 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 automotive market has recorded its finest yr because the pandemic as a robust December, up 9.8%, wrapped up the seventeenth month of consecutive development. 1.903 million new vehicles reached the street throughout 2023 – a rise of 17.9%, in response to the newest figures from the Society of Motor Producers and Merchants (SMMT).

Development was pushed solely by fleet funding because the earlier yr’s provide constraints light 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%. Personal client demand remained secure at 817,673 items after a robust restoration in 2022, with value of dwelling pressures and excessive rates of interest constraining development. Whereas the general new automotive market stays -17.7% under pre-pandemic ranges,1 the surge in uptake in contrast with the earlier yr noticed the worth of recent automotive gross sales leap greater than £10 billion to round £70 billion, with 288,991 further automobiles reaching the street.2

By way of automobile sort, consumers confirmed a continued choice 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 most well-liked since 2013.

Because the trade transitions away from fossil fuels, drivers continued to take a position closely in low and 0 emission automobiles – which meant common new automotive 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 robust yr, with a 39.3% enhance 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 street than in 2020 and 2021 mixed.3 BEV volumes really fell by -34.2% within the final month of the yr, however it is a reflection of an irregular December 2022 when important numbers of orders have been in a position to 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 non-public 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 client BEV buy incentives – however it’s now additionally the one market with mandated minimal targets for brand spanking new ZEV registrations.

With mainstream client demand flat, the trade is looking on authorities to help non-public consumers by halving VAT on new BEVs for 3 years. This non permanent minimize would give non-public shoppers entry to fiscal help at a degree 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 automotive 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 resulting from these automobiles sometimes having larger buy prices than their ICE counterparts.7 Halving VAT would give shoppers 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 automobile for every further driver switching from an ICE to a BEV. This might encourage an additional 270,000 new automotive consumers in Britain to go electrical and put 1.9 million new EVs on the street by the top of 2026.8 Such a step would have a profound influence on the UK’s carbon footprint, decreasing street 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 automotive market is constructing again with the very best yr 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 client incentives that may make the UK the main European marketplace for ZEVs.10

Waiting for 2024, the newest market outlook – revealed in November – anticipates 2024’s new automotive market to succeed in 1.97 million items, with 439,000 BEVs taking a 22.3% market share. The following quarterly revised outlook can be revealed in February.

1 2019 registrations: 2,311,140
2 Primarily based 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 most well-liked sort of automotive for the month
5 BEV giant 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 Primarily based on SMMT evaluation – assumed 65% of the market would profit from a VAT minimize, lifting demand for that proportion by 25% (based mostly on 1% value 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 Primarily based on SMMT evaluation – 1.94 million X VAT saving (£3,956, based mostly on JATO common value of BEV) = £7.7bn. CO2 saving based mostly on 1.5tCO2 saved per automotive pa by the 1.94 million new BEVs registered between 2024 and 2026.
10 As of the newest out there ACEA European market knowledge, for November 2023, the UK is the second largest European BEV market by quantity and sixteenth by market share


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