The UK New Car Market Sees Growth in Electric Vehicle Sales

The UK new car market saw a return to growth last month, with a surge in demand for electric cars driving the uptick. However, industry experts warn that the current level of discounting is unsustainable and call on the government to provide more support for the transition to electric vehicles.

According to the Society of Motor Manufacturers and Traders (SMMT), May marked the best month for new car registrations since 2021, although it was still 18.9% lower than the same month in pre-pandemic 2019. The growth in registrations was primarily driven by a 3.7% increase in fleet registrations, which accounted for 60% of the market share.

Private car sales were down 2.3%, making up 37.4% of the market, while business registrations saw a significant 14.4% growth but only represented 2.6% of total registrations.

Electric cars continued to see growth, with nearly 33,000 units registered in May, marking a 25.8% increase from the previous year and accounting for 21.8% of the market share. This is below the 28% target set by the ZEV mandate for EV sales but surpasses the market share of hybrids and plug-in hybrids.

The SMMT attributes the rise in EV registrations to the incentives offered by manufacturers to drive uptake. However, the organization emphasizes the need for the government to provide fiscal incentives to further support the switch to electric vehicles.

One proposal put forward by the SMMT is to halve VAT on new EV purchases, which could result in 276,000 new EVs on the road in the next three years, leading to a significant reduction in CO2 emissions. The government is also considering reducing VAT on public charging and removing electric cars from the Expensive Car Supplement.

While EV sales saw growth, diesel registrations continued to decline, dropping by 15.5% last month and accounting for just a 5.2% market share. Petrol car sales also saw a decrease of 12.5%, despite still making up nearly half of all registrations.

SMMT chief executive Mike Hawes expressed optimism about the growth in new car registrations but raised concerns about the sustainability of manufacturer discounting, particularly for electric vehicles. He emphasized the importance of investments in new product development for the decarbonization of road transport.