December new-car registrations saw an increase year-on-year, although the numbers belie the state of the market in 2022.
For the fifth year in a row, December registration figures showed growth, with numbers increasing 18.3% to 128,462 units, figures from the Society of Motor Manufacturers and Traders (SMMT) show. Yet the entire year ended 2% down on 2021, as supply constraints and the cost-of-living crisis continues to affect the market.
To add to the industry’s woes, the 1.61 million vehicles registration figure in 2022 is around 700,000 units down compared to pre-pandemic levels. While a recovery is expected in 2023, based on last year’s numbers, it is not expected for the new-car market to reach the heights seen in 2019 for some time to come.
“The automotive market remains adrift of its pre-pandemic performance but could well buck wider economic trends by delivering significant growth in 2023,” commented Mike Hawes, SMMT Chief Executive.
“Looking ahead, supply chains are beginning to stabilise and although the shortage of semiconductors is expected to ease, erratic supply will likely impact manufacturing throughout 2023. The most recent market outlook, published in October 2022, anticipates around 1.8 million new car registrations in 2023, worth around £8.4 billion in additional turnover.”
BEVS star in December registration figures
Battery-electric vehicles (BEVs) continued their strong showing, with the December registration figures giving them their largest-ever monthly share, at 32.9%. The technology has consistently placed second in the registration figures during 2022, behind only petrol. Therefore, BEVs end the year with a 16.6% share of registrations, surpassing diesel for the first time in year-end figures.
Although the technology is increasing in popularity, carmakers have also been prioritising the delivery of BEVs, as the semiconductor crisis began to ease in the second half of the year. With a need to reduce fleet-average emissions, ensuring customers have their zero-emission vehicles, with many waiting up to a year for new cars, was essential.
Yet the December registration figures show that plug-in cars accounted for a total 22.9% of the market in 2022, while hybrids took 11.6%. As a result of this, the average new-car CO2 fell 6.9% to 111.4g/km, the lowest since records began.
Petrol registrations increased by 1.13% in December, but in the year they fell by 6.3%. Still, the fuel type remained the most popular, with a 43.1% share in December and a 55.9% market share in the full year. Diesel, however, continued its downward turn, ending the year 33.7% down compared to the whole of 2021. Just 155,324 units were registered in 2022, compared to 902,174 petrol vehicles. Considering until 2016 the fuel type was vying with petrol for top spot, it is quite a decline.
While private buyers accounted for more than half of all registrations, fleets and business buyers were responsible for the lion’s share of BEVs, accounting for two thirds (66.7%) of all BEV registrations and 74.7% of the volume gain in 2022.
Last year was a very mixed bag for the automotive industry, as the December registration figures show. The first half of the year was all about suffering due to the supply crisis, and cost-of-living issues. But the recovery in the second-half of the year prevented the figures from being some of the worst on record. For context, however, the numbers are below the COVID-19-hit year of 2020.
Encouraging BEV registrations will need help
The SMMT believes that ensuring drivers in every part of the UK can benefit from BEVs will depend on broader policies to encourage uptake of zero-emission vehicles, with this needing to begin in 2023. The December registration figures show that BEVs are popular, if not quite at the levels of petrol vehicles yet. The cost-of-living crisis is, however, making more people think about switching in order to reduce fuel bills, if they can afford the initial outlay.
While the industry recognises the need for fair vehicle taxation, plans to introduce VED on BEVs from 2025 with the same ‘premium’ threshold as internal combustion-engine cars will disproportionately penalise those moving to electric, the organisation stated. Higher production costs mean more than half of all BEV registrations this year would have incurred the ‘premium’ VED if it had been in place, a move which risks discouraging wider adoption.
Additionally, chargepoint provision also remains a barrier to EV uptake. The government’s EV Infrastructure Strategy forecast that the UK would require between 300,000 and 720,000 chargepoints by 2030. Meeting just the lower number would still require more than 100 new chargers to be installed every single day. The current rate is around 23 per day. As the December registration figures show, with BEV uptake increasing rapidly, there will be more demand for chargepoints than ever before.
Manufacturers face a Zero-Emission Vehicle Mandate from 2024, details of which have still not been published. As a result, the SMMT believes accelerated investment in charging infrastructure is needed if consumers are to be confident they can make the switch and brands are to have a chance of securing sufficient supply to support UK market growth and not lose out to other markets which are investing more rapidly.
“To secure that growth, which is increasingly zero-emission growth, the government must help all drivers go electric and compel others to invest more rapidly in nationwide charging infrastructure,” added Hawes. “Manufacturers’ innovation and commitment have helped EVs become the second most popular car type. However, for a nation aiming for electric mobility leadership, that must be matched with policies and investment that remove consumer uncertainty over switching, not least over where drivers can charge their vehicles.”
Responding to the December registration figures, John Wilmot, CEO, car leasing comparison website LeaseLoco, commented: “While EVs grabbing second spot in market share makes good headlines, the reality is that growth in electric vehicle ownership in the UK is actually falling according to the latest Department of Transport electric vehicle registrations data.
“Between Q2 2022 and Q3 2022, battery electric vehicle registrations increased just 9.8%, compared to 11.6% between Q1 2022 and Q2 2022, and 15.5% between Q4 2021 and Q1 2022.
“With the government’s focus likely to be elsewhere in the coming months, as the country grapples with high inflation and the cost of living crisis, it is hard to believe that EV charger provision is going to be at the top of MPs’ intrays.”
The automotive market often awaits the December registration figures to see how well the UK has performed in the year. Yet the mixed tale of 2022 highlights the challenges faced, and the potential to build further in 2023.