New car sales in the UK thrive in 2024

The UK new car market has maintained its impressive growth trajectory in 2024, marking 24 consecutive months of expansion as of July. With 147,517 units registered in July, the market saw a 2.5% year-on-year increase, making it the best July performance since 2020. Year-to-date sales have increased 5.5%, with 1,154,280 cars registered in the first seven months of 2024. 

Fleet demand stimulates growth 

The fleet sector has been the primary driver of growth, with registrations up 13% in July and capturing a 62% market share. Contrastingly, private demand in the fleet sector has continued to decline, falling by 11.1% and accounting for 36.2% of monthly deliveries. 

Electric vehicles (EVs) rise in popularity 

While demand for petrol and diesel cars has fallen, EVs have seen a surge in popularity. Battery electric vehicles (BEVs) outperformed the overall market in July, comprising 42% of new car registrations.  

Hybrid electric vehicles (HEVs) also saw a 31.4% increase, achieving a 14.5% market share, and plug-in hybrid vehicles (PHEVs) grew by 12.4% to capture an 8.9% market share. 

BEV volumes surged by 18.8% in July, resulting in an overall market share of 18.5%. However, the private share of the BEV market continues to decline, with only 17.2% of BEVs purchased by private buyers, compared to 20.3% last year. 

Challenges in meeting zero emission targets 

Despite the rise in BEV registrations, the transition to zero-emission vehicles is progressing slowly enough to meet mandated targets.  The pressure is on each brand to ensure that zero-emission vehicles make up at least 22% of their new car registrations for the year. 

The latest industry outlook suggests that achieving this target is increasingly unlikely under the current market conditions. While overall market growth is anticipated for 2024, expectations have been revised downward since April, with forecasts now predicting 1.968 million new car registrations by the end of the year. 

Industry insights and the future outlook 

The UK's new car market continues to grow, driven by fleet sales and increasing EV registrations. However, meeting zero-emission targets remains a significant challenge. 

According to Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), "Weakening private retail demand, however, particularly for EVs and despite generous manufacturer discounts, is the overriding 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." 

As the industry navigates these challenges, there have been recent reports that Original Equipment Manufacturers (OEMs) are considering decelerating their overall sales to increase the likelihood of staying compliant with the ZEV Mandate and avoiding significant penalties. While this may seem a way of negating short-term risk, this is unlikely to be sustainable for the longer term.  

It is therefore critical that OEMs, retailers and policymakers work together to find a balance between accelerating the transition towards cleaner and greener transport, without creating a negative impact for the broader industry, including OEMs that manufacture as well as sell in the UK. 

As we enter the summer months, it’s predicted there will be a traditional drop off in sales in the lead up to September, with a potential further impact as consumers focus on the holiday season, the Euros and the Olympics. The next few months will be crucial to OEMs in determining how they meet internal and external full-year targets, without negatively affecting profitability and long-term strategy. 

As the market prepares for the critical new number plate month of September, there’s a strong call from industry stakeholders for immediate action to sustain the momentum and achieve long-term sustainability goals. 

However, to maintain the growth trajectory and support the transition to electric vehicles, further economic incentives and improved infrastructure are essential, according to industry experts