August new car market holds steady

The UK new car market remained stable in August, down just -1.3%, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

In what is traditionally one of the quietest months of the year for new car sales, with many buyers preferring to wait until September’s new number plate, 84,575 units were registered, just 1,082 fewer than in the same month last year.

Continuing the recent trend, fleet purchases drove the market, accounting for six in 10 cars registered last month, or 51,329 units, despite a -1.2% drop compared with the same month last year, Registrations by private buyers, meanwhile, were flat, up 0.2% units to 32,110. Business registrations were down by -30.3% to 1,136 units.

Petrol and diesel uptake fell by -10.1% and -7.3% respectively, but together these fuel types still represented more than half (56.8%) of all new car uptake in August. Plug-in hybrid (PHEV) registrations declined -12.3%, with a 6.8% share, but hybrid electric vehicle (HEV) uptake increased, by 36.1%, to take 13.8% of the market.

Battery electric vehicle (BEV) registrations, meanwhile, rose 10.8% thanks to heavy discounting by manufacturers over the summer and a raft of new models attracting buyers. Market share in August reached 22.6%, the highest for a month since December 2022, when BEVs commanded 32.9% of all new cars reaching the road.

Year to date, BEV market share has edged up to 17.2% and is expected to rise further to 18.5% by the end of the year thanks to increasing model choice – with some 364,000 BEVs registrations forecast for the year. Despite this growth, this will still be shy of the 22% required by the Zero Emission Vehicle Mandate.

Ahead of the Autumn Budget due on 30th October, the industry is calling for urgent action to bolster the market for new EVs, including binding targets on public chargepoint provision commensurate with those placed on industry, the reintroduction of incentives for private buyers and removal of disincentives, including the Vehicle Excise Duty expensive car supplement, set to be introduced in 2025.

Mike Hawes, SMMT Chief Executive, said, “August’s EV growth is welcome, but it’s always a very low volume month and so subject to distortions ahead of September’s number plate change.

“The introduction of the new 74 plate, together with a raft of compelling offers and discounts from manufacturers, plus growing model choice, will help increase purchase consideration and be a true barometer for market demand. Encouraging a mass market shift to EVs remains a challenge, however, and urgent action must be taken to help buyers overcome affordability issues and concerns about chargepoint provision.”

Ian Plummer, Auto Trader’s Commercial Director noted: “UK registrations were sluggish overall in August as buyers historically hold fire for September’s plate changes – although we did see a better balance between fleet and retail demand, and stronger growth for electric vehicles.

“Heavy discounting from manufacturers and our biggest ever new car campaign have helped drive the electric share of new car leads on Auto Trader to 27%, the highest market share since the end of 2022. New car visits overall are up 9% year-on-year on the site. “As we approach the end of the first year of the government’s Zero Emission Vehicle Mandate, we’re cautiously hopeful that this growth in EV interest will translate into higher sales although the current market share still remains below the 22% required by the ZEV rules. “In order to ensure this is a fair and successful transition we need confidence in the existing support for the new car market, financial incentives to make used EVs affordable for all, transparency about future changes in road pricing and taxes as well as full support for the charging industry to speed up installation.”

Commenting on August’s new car registration figures, James Hosking, Managing Director of AA Cars, said: “After reaching two years of uninterrupted growth, the new car market’s momentum has finally stalled.

“While fleet and business purchases previously drove sales, offsetting declining private demand, this trend came to an end in August.

“The slowdown in private car purchases may be linked to the rising popularity of salary sacrifice schemes. These schemes offer a tax-efficient and cost-effective alternative for many consumers, potentially drawing them away from traditional private car ownership.

“Despite this, EV sales continue to surge, up 10.8% year-over-year, driven by increased model availability, a wider range of price points and summer discounts. We are also seeing this trend trickle down into the used car market, further expanding EV accessibility and contributing to their growing popularity.

“Looking ahead, an uplift in private sales could hinge on the success of this month’s plate changes and the number of consumers drawn to owning a brand new 74 registration. Historically, this biannual event has stimulated sales as many businesses and individuals time their purchases to coincide with the new registration plates.

“As we enter the final quarter of 2024, the market faces a mixed outlook. While inflation continues to sit around the Bank of England’s 2% target and a further interest rate cut remains possible, the October budget and potential tax rises introduces some uncertainty. The motoring industry’s resilience will be tested as it faces these economic headwinds. Although sales have remained buoyant, we must temper our optimism.

“The industry’s adaptability in the face of these challenges will be key to maintaining its current trajectory, but we could see some market fluctuations in the coming months.”