The UK registrations slowdown appears to have begun, with battery-electric vehicle (BEV) registrations in particular suffering. Figures in November climbing at a slower rate than any time this year, increasing by 9.5%, the first single digit rise of 2023.
This equates to 156,525 new passenger cars taking to UK roads in the month, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). The market is currently in a state of recovery, following the COVID-19 pandemic and following supply-chain crisis. This eased towards the end of 2022, with deliveries improving in the last months, skewing the market figures.
The increase is still positive, against a month last year where bottlenecks on deliveries ended and a flood of cars were passed onto their new owners. In a bigger positive, the market ended just 0.1% down on November 2019, the benchmark for pre-pandemic registration figures.
In the year to date, the registrations market is up 18.6%, with 1.762 million units, signalling a continued recovery across the year for new-cars.
Fleets first as BEV registrations falter
The growth in November was driven entirely by the fleet market, with registrations in this sector rising 25.4%, accounting for 93,049 of the total, or a 59.4% market share. Private demand fell 5.9%, with 60,506 units, while business uptake fell 32.7% to 2,970 units.
Fleets were also the main driver for BEV registrations, which saw its second month of declines. Overall, BEV registrations were down by 17.1%, with 24,359 units taking to the road. Of this amount, 77.4% were purchased by the fleet and business markets, buoyed by compelling tax incentives.
This means the BEV market share for the month fell to 15.6%, down from 20.6% last year, while in the year-to-date, the technology holds a 16.3% share of the market. The SMMT expects this to rise to a 22.3% market share in 2024, but this is very close to the ZEV Mandate target of 22%, and the slightest knock in confidence in the market could cause issues for the industry.
However, BEV registrations were particularly impacted by the supply-chain crisis last year, with electric vehicles often including more semiconductors than most other cars. When the crisis ended, a flood of BEVs were delivered to drivers, with registrations last year up 35.2%. This was a higher-than-expected number, so the decline this year is not unexpected, although the market is struggling with poor media coverage and a lack of faith from potential owners.
‘Britain’s new car market continues to recover, fuelled by fleets investing in the latest and greenest new vehicles,” commented SMMT Chief Executive Mike Hawes. “With car makers gearing up to meet their responsibilities under new market legislation, and COP28 currently underway, now is the time to take sensible steps that will multiply that economic growth and minimise carbon emissions. Private EV buyers need incentives in line with those that have so successfully driven business uptake, and workable trade rules that promote rather than penalise the transition.
While BEV registrations struggled, hybrids and plug-in hybrids (PHEVs) saw strong growth, rising by 27.8% and 55.8% respectively. Including mild hybrids, petrol was again the dominant fuel type, and grew its market share for the first time in months, with 12.9% more registrations and a 54.5% hold. Diesel continued to decline, with deliveries down 10.7% in the month, equating to 6.7% of the market.
Rules of Origin problem
The increase of BEV registrations in the fleet market does present a future opportunity for the independent aftermarket. Companies often defleet after three years, which is the time for vehicles to enter workshops, around the time of their first MOT. As these cars enter the used market, buyers who are considering electric vehicles are more likely to buy at the cheaper rates, and without ties to a franchised dealership, the independent sector can benefit. Therefore, BEV registrations in fleets is perhaps the most important number for the industry to focus on.
Another pressing problem for the electric vehicle market is the looming Rules of Origin target increases, that could see tariffs imposed on BEV imports. This would likely increase the cost of models by 10%, and seriously impact BEV registrations, unless carmakers can source battery materials and components in their local market in the next two weeks, an impossible situation.
However, the European Commission has highlighted that it is willing to postpone the target increases to the next deadline in 2027, which gives the industry time to build an EV supply chain without the disruptions of recent years. With a number of gigafactories planned in the UK and Europe, this extension will ease the pressure on the market, and prevent catastrophic price rises for BEVs at a time when the technology is struggling to make an impact on the private market.
