New automobile gross sales rise however possibilities of makers hitting EV targets look bleak
- July marked a 24th consecutive month of new car sales growth
- Fewer than one in five (18.5%) models registered were EVs as demand stalls
- Car makers are required to increase EV sales share to 22% in 2024
Last month saw a 2.5 per cent increase in the numbers of new cars delivered to customers compared to July 2023 – the 24th consecutive month of growth for the sector as it continues on a road to recovery following the pandemic.
Some 147,517 models were registered last month – the highest figure for a July since 2020 when showrooms were finally allowed to re-open following four months of Covid lockdowns and dealers were able to fulfil pent-up demand for new cars.
But while registrations are continually growing, the likelihood of car makers achieving electric vehicle sales targets looks bleaker by the month as private registrations declined again.
New car sales have grown for a 24th consecutive month as the market continues its post-pandemic recovery. However, EV registrations are well short of binding targets, new industry figures show
Last month was the best July new car sales performance since 2020, which was artificially high due to the reopening of showrooms following the first Covid lockdowns
July’s new car growth was sustained entirely by the fleet sector, official data from the Society of Motor Manufacturers and Traders shows.
A 13 per cent year-on-year increase in registrations means that more than three in five cars (62 per cent) entering the road last month were via fleet customers.
On the other hand, private demand continued to diminish, falling by 11.1 per cent to account for a third (36.2 per cent) of deliveries in July.
The latest data also shows the shift change in the new models entering the UK car parc.
Declining sales of both diesel (down 21.9 per cent) and petrol cars (down 5.9 per cent) signal a combination of drivers having fewer choices for these fuel types and a transition to greener vehicles.
Diesel accounted for around one in seventeen (5.9 per cent) new registrations last month; a decade ago, oil burners represented 50 per cent of the new car market in July 2014.
Electric car (BEV) sales for the year make up just 16.8% of all new registrations in 2024 so far. This is well short of the 22% required by binding Government rules introduced this year
Kia Sportage eats into Ford Puma’s lead in race to become UK best-seller
Kia’s Sportage was the most popular new model in July, records show.
The Korean car maker sold 3,999 examples in the month, with the Nissan Qashqai (3,633) and Ford Puma (3,418) rounding out the top three.
July’s performance means the Sportage is gradually eating into the Puma’s lead in the overall sales chart for 2024, with the Ford ahead on 29,792 registrations and Kia’s SUV trailing with 28,138 sales.
In contrast to falling combustion-engine car sales, appetite for ‘electrified’ vehicles – including hybrids, plug-in hybrids and full EVs – outpaced the overall market.
More than two in five (42 per cent) cars registered last month had some form of electric power.
Hybrid (HEV) uptake increased by 31.4 per cent to achieve a 14.5 per cent market share, while plug-in hybrids (PHEV) grew 12.4 per cent and made up 8.9 per cent of all registrations.
There was also growth in the EV segment, up 18.8 per cent year-on-year to 27,335 models.
In July, fully electric cars made up 18.5 per cent of all sales.
However, the vast majority went to fleets, with private sales representing just 17.2 per cent of all EV registrations – down from 20.3 per cent in July 2023.
Included in fleet sales is drivers who utilise salary sacrifice schemes through employees to secure better deals on electric cars.
This is muddying the waters somewhat when it comes to trying to reflect public demand for EVs using registrations figures.
Car makers still well short of binding EV sales targets
The hotly-debated Zero Emission Vehicle (ZEV) mandate, introduced this year, requires manufacturers to increase their EV sales share to at least 22 per cent of all registrations.
However, for the year to date, EVs make up only 16.8 per cent of the new car market.
Failure to meet the 22 per cent threshold could result in fines of up to £15,000 per car below the 2024 target.
The Zero Emission Vehicle (ZEV) Mandate requires car makers to sell an increasing share of EVs each year until the proposed ban on sales of new petrol and diesel models. With Labour widely expected to bring forward the ban from 2035 to 2030, the ZEV targets will need to be accelerated
With the 2035 ban on sales of new petrol and diesel cars expected to be brought forward to 2030 by the Labour Government, the ZEV mandate thresholds will need to be accelerate to meet the revised timeline to end availability of motors with internal combustion engines.
The SMMT says the pace of transition to EVs already needs to increase significantly but ‘such a surge is looking increasingly unlikely given the current market conditions’.
The trade body has again revised down its predictions for EV sales share, dropping it to 18.5 per cent from the 19.8 per cent estimated in April.
Mike Hawes, SMMT chief executive, said: ‘Two years of new car market growth against a backdrop of a turbulent economy is testament to the sector’s resilience and the attractiveness of the deals on offer.
‘Weakening private retail demand, however, particularly for EVs and despite generous manufacturer discounts, is the over-riding concern.
‘More people than ever are buying and driving EVs but we still need the pace of change to quicken, else the UK’s climate change ambitions are threatened and manufacturers’ ability to hit regulated EV targets are at risk.’
Hawes said the market is now becoming more reliant on a strong sales performance in September – the new plate change month – and called on greater support from the Government in the form of EV incentives and a boost to charging infrastructure.
The SMMT says the Government needs to step in with more financial incentives to boost uptake of EVs. Industry analysts say benefits currently available to fleet customers are propping up the electric car market
Richard Peberdy, UK head of automotive for KPMG, said: ‘Benefit-in-kind and salary sacrifice incentives for business have been the major driver of growth in EV sales and market share for some time now.
‘The evidence increasingly suggests that accelerating private EV sales may require similar incentivisation, particularly if the government is going to reinstate the 2030 end to new petrol and diesel vehicle sales.’
Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, added: ‘If the ban on new petrol and diesel car sales is to be maintained or moved forward, we can expect further calls from within the industry for financial incentives on electric vehicles to support demand.
‘In the meantime, for consumers seeking more affordable options, there are cheaper electric vehicle models becoming available, including a number of new brands entering the market.’
