The UK’s new car market recorded its second month of growth this year, in what is becoming a turbulent period for the automotive industry.
The latest data, published by the SMMT, shows registrations rose by 1.6% in May, with 150,070 models taking to UK roads. It was the best May performance since 2021, but was still 18.3% lower than 2019, prior to the COVID-19 pandemic.
The small improvement was driven by battery-electric vehicle (BEV) and plug-in hybrid (PHEV) deliveries. Full hybrids also improved, albeit by a smaller volume. Once again, petrol and diesel registrations fell, with their market share now in danger of being overtaken by electrified models.
Between January and May, registrations were up 2.8%, with 850,903 new units delivered, an improvement of 23,403 passenger cars.
Fleets drive new registrations
Breaking down the latest registrations figures, fleets and businesses drove deliveries. Figures were up by 3.7% and 14.4% respectively, while combining these sectors made them responsible for 62.6% of the total registrations in May.
However, interest from private buyers declined, by 2.3%, suggesting there is a lack of appetite for new cars in this sector.
For the aftermarket, this suggests two things. Firstly, drivers are continuing to hold on to their vehicles for longer, backed up by an ageing car parc and increased used car sales.
Secondly, with the fleet sector driving registration numbers up each month, there will be an influx of models coming to the used car market in three-years’ time. It is therefore important to note that many of these vehicles will be full hybrid, PHEV or BEV, with these powertrains the only ones improving so far this year.
ICE slips
Petrol registrations were down by 12.5% in May, with 71,291 units delivered to customers. The fuel type was still the market leader, with 47.5% of total registrations, but this has dropped from the 55.2% it commanded in the same month last year.
The fuel type has struggled this year, and while its leading share sounds strong, it was just 0.2 percentage points (pp) ahead of the combined electrified market. February was the first time ever that this combination beat petrol in the market share, and it is likely to happen again this year.
Petrol is struggling across Europe. While many will suggest that carmakers are instead focused on delivering mild hybrids (MHEVs), rather than pure petrol models, the SMMT combines these technologies together. This has reduced the losses, compared to those markets where MHEVs are partnered with full hybrids instead.
But the loss suggests that rather than a move away from petrol by carmakers, drivers are turning to electrified options. This, in turn, pushes carmakers into a new strategy of focusing on hybrids, BEV and PHEV options, reducing the petrol range.
Therefore, while regulations are pushing petrol out, natural market progression may do the job sooner. The fuel type is in no danger of losing its dominant lead at the top in terms of all powertrains alone, but with a drop of 10,217 units in May, consumer habits have clearly changed.
Diesel, meanwhile, say a 15.5% decline in the month. However, with just 7,792 units delivered, this was just 1,428 units down year on year. The powertrain took just 5.2% of the market, down 1pp.
In the year to date, petrol registrations have declined by 10.4%, with 416,811 deliveries, a 49% market share, while diesel has dropped by 13.5%, with 48,006 registrations. This is a 5.6% market share, the worst of all powertrains.
BEVs helped by discounting
With traditional powertrains floundering, it is up to the electrified market to pick up the pieces. The second-most-popular technology in the UK is BEVs, with 32,738 registrations in May alone, up 25.8%. This was a 21.8% hold of the market total, an improvement of 4.2pp compared to last year.
This was aided by heavy manufacturer discounting, with brands looking to meet their zero-emission vehicle mandate targets this year. This is despite new model offerings coming with substantially-reduced price tags.
The SMMT highlights that manufacturers are investing billions to deliver zero emission mobility for all, and consumers are responding, but not in the volumes needed. Therefore, the industry is calling on government to match this commitment with fiscal incentives.
Halving VAT on new EV purchases would put 267,000 additional new EVs on the road in the next three years and drive down CO2 emissions by six million tonnes a year.
Removing EVs from the VED Expensive Car Supplement, meanwhile, and equalising VAT paid on public charging to that levied at home would send a signal that now is the time to switch, the association stated.
In the first five months of the year, BEVs are up 33.4%, with 177,487 models taking to UK roads. This is a significant rise, and highlights an increasing trend towards the technology, something garages need to be aware of. Their market share of 20.9% is also up, by 4.8pp. This is still below the mandated 28% threshold, however.
Hybrids on high
Registrations of PHEVs improved best in the month, with 17,898 units equating to a 50.8% rise year on yar. The bridging powertrain made up 11.9% of May’s total, up from 8% recorded a year previously.
This means that between January and May, PHEVs have seen growth of 31.9%, with a market share up by 2.3pp.
Meanwhile, full hybrids were the UK’s third-most-popular powertrain in May, with 20,351 units delivered. This was up by 6.8% compared to the same month last year. This meant just 1,298 new units took to the country’s roads, as buyers and businesses seem to favour plug-in models. Their 13.6% market share was up by just 0.7pp.
In the year-to-date figures, full hybrids are up 13.2%, with 122,942 units leaving dealerships. This is a 14.4% hold of the total, up 1.3pp.
Combining figures
Merging petrol and diesel performances in May, the ICE market shrank by 12.8%, with 11,645 fewer units compared to last year. The sector still led the UK market, with 52.7% of registrations, but this was a drastic drop from the 61.4% it recorded in May 2024.
Meanwhile, electrified models saw deliveries improve by 24.6%, with 14,307 more units. Their 47.3% market share was up 8.7pp.
In the year to date, ICE registrations are down 10.8%, with 56,098 fewer deliveries. The 54.6% market share is down 8.4pp. Electrified registrations are up 25.9%, with 79,501 more units taking to the road. This is a 45.4% market share, up 8.4pp year on year.
