The UK new car market rose 1.0% in September, the key ‘74’ plate change month, to 275,239 units.

This is according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

In what is traditionally a bumper month for new car registrations, second only to March, the performance was the best since 2020, but still -19.8% off pre-Covid September 2019.

Driving off the forecourt

Growth was driven by fleet purchases, which increased 3.7% to 149,095 units and represented 54.2% of the overall market.

More telling of the overall health of the current market is that private consumer demand fell by -1.8% to 120,272 units.

Private cars account for 43.7% of registrations, while smaller businesses also saw volumes fall -8.4% to 5,872 units.

 

 

Hedging bets

Uptake of plug-in hybrids (PHEV) grew faster than any other fuel type in the month, up 32.1% to take an 8.9% market share.

Hybrid electric vehicle (HEV) registrations rose 2.6%, boosting market share to 14.2%.

Meanwhile, petrol and diesel registrations declined by -9.3% and -7.1% respectively.

However, together they still represent 56.4% of buying choice in September.

Encouragingly for the environment and international emissions agreements, demand for the latest battery electric vehicles (BEV) hit a new record volume for any month in September.

These were up 24.4% to 56,387 units, achieving a 20.5% share of the overall market, up from 16.6% a year ago.

This was not enough, however, to shift market share significantly, which edged up from 17.2% in the first eight months, to 17.8% from January- September.

It is expected to reach 18.5% by the end of the year.

Working the sales

 

Fleets drove much of the growth, rising 36.8% to account for more than three quarters (75.9%) of BEV registrations.

Private BEV demand rose 3.6% after unprecedented manufacturer discounting, but this was equivalent to just 410 additional registrations.

Consumer demand for diesel grew faster, increasing 17.1% in September—a volume uplift of 1,367 units.

Year-to-date private BEV demand remains down -6.3%—underlining the scale of the challenge involved in moving the mass market to meet the mandated targets, which were conceived in very different economic, geopolitical, and market conditions.

Previous assumptions of a market delivering steady BEV growth, cheaper and plentiful raw materials, affordable energy and low interest rates have not come to fruition, with the upfront cost of BEV models remaining stubbornly high.

Added to this is consumers’ lack of confidence in the UK’s charging provision, which, despite recent investment and growth, still acts as a barrier to BEV adoption.

 

 

Jump leads to the ready

To offset this underlying paucity of demand, SMMT calculates that manufacturers are on course to spend at least £2 billion on discounting EVs this year.

Given the many billions already invested in developing and bringing these models to market, the situation is untenable and threatens the viability of manufacturers and retailers.

For this reason, SMMT and 12 major vehicle manufacturers representing more than 75% of the market, have today written to the Chancellor .

The letter calls for measures to support consumers and help speed up the pace of the EV transition. These include:

  • Temporarily halving VAT on new EV purchases to put more than two million new ZEVs (rather than petrol or diesel) on the road by 20283
  • Scrapping the VED ‘expensive car’ tax supplement for ZEVs, due next year, to avoid penalising buyers
  • Equalising VAT on public charging to match the 5% home charging rate, and mandating infrastructure targets to support those who cannot charge at home
  • Maintaining and extending the business incentives that are working, including Benefit in Kind which supports company cars and those on salary sacrifice schemes, and the important Plug-in Van Grant

 

Defensive driving

Mike Hawes, SMMT Chief Executive, said: “September’s record EV performance is good news, but look under the bonnet and there are serious concerns as the market is not growing quickly enough to meet mandated targets. Despite manufacturers spending billions on both product and market support – support that the industry cannot sustain indefinitely – market weakness is putting environmental ambitions at risk and jeopardising future investment. While we appreciate the pressures on the public purse, the Chancellor must use the forthcoming Budget to introduce bold measures on consumer support and infrastructure to get the transition back on track, and with it the economic growth and environmental benefits we all crave.”