Best year for new car sales since the covid-19 pandemic

New data from the Society of Motor Manufacturers and Traders (SMMT) shows a marked jump in annual new car sales. Its findings suggest that the UK’s new car market had the strongest year since 2019, with 1.9 million vehicles sold in 2023, up 17.9% year on year. The report states that a major contributor to this uptick was the investment by companies in new electric fleet vehicles, as supply issues seen in the previous year eased. In a further announcement by SMMT it has been reported that UK used car transactions also grew- up by 5.1% in 2023, with 7.2 million cars changing hands last year[i].

Drivers heavily invest in zero emissions vehicles (ZEVs)

Within the 2023 UK sales figures is a marked jump in the volume of so-termed zero emissions vehicles (ZEVs), as well as low-emissions vehicles such as plug-in hybrids (PHEVs). This change resulted in an estimated 2.2% reduction in the average CO2 emissions of new cars in the UK, down to 108.9 g/km. PHEVs were up by almost 40%, accounting for 7.4% of new car registrations, whilst hybrid electric vehicles (HEVs) were up by 27.1% to make up 12.6% of sales.

Source: SMMT

Fleet investment fuels growth in BEV sales

Fully electric BEV vehicles accounted for 16.5% of sales, up by 17.8% year on year, with SMMT noting that this was driven by business and fleet purchasers attracted by tax incentives. However, for private buyers BEVS represented only one in every eleven new cars sold, compared to one in six for business purchases. This suggests a discrepancy between the two, and highlights the opportunity for BEV purchase incentives for consumers, something which industry is calling for, with SMMT suggesting the UK government halve VAT on new BEVs. They argue that this would hand UK consumers an estimated extra £7.7 billion in BEV buying power, encourage an extra 270,000 new car buyers to switch to an EV, and put 1.9 million new electric cars on Britain's roads by the end of 2026[ii].

SMMT’s chief executive Mike Hawes said:

“With vehicle supply challenges fading, the new car market is building back with the best year since the pandemic. Energised by fleet investment, particularly in the latest EVs, the challenge for 2024 is to deliver a green recovery. Government has challenged the UK automotive sector with the world’s boldest transition timeline and is investing to ensure we are a major maker of electric vehicles. It must now help all drivers buy into this future, with consumer incentives that will make the UK the leading European market for ZEVs”[iii]

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References

[i] Used car market up as EV sales reach record levels - SMMT

[ii] Government urged to halve VAT on new electric cars | Electrifying.com

[iii] New car market delivers best year since 2019 as fleets fuel growth - SMMT

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