New car market grows for sixth month in a row in best start to a year since before Covid – Car Dealer Magazine
The new car market grew by nearly 15 per cent last month to reach 131,994 units – the best start to a year since pre-Covid January 2020.
Figures for January 2023 – released this morning by the SMMT – marked the sixth month of expansion in a row and set the tone for an anticipated counter-cyclical year of growth, according to the trade body.
The UK new car market grew by 14.7 per cent, with electrified vehicles notably driving the increase, thanks to manufacturers bringing more choice to the market in spite of continuing supply chain struggles.
Hybrid electric vehicles (HEVs) comprised 14.4 per cent of new car registrations, increasing volumes by 40.6 per cent, with a figure of 18,976 units.
Meanwhile, battery electric vehicle (BEV) registrations rose by 19.8 per cent to reach 17,294 units, or 13.1 per cent of new registrations – slightly below the average for 2022.
Plug-in hybrid vehicles (PHEVs) recorded a 0.7 per cent rise at 9,109, although their share fell to 6.9 per cent of new cars reaching the road.
As a result, one in five new cars registered in the month came with a plug.
It was also a strong month for large fleet registrations, which rose by 36.8 per cent to 69,540 units, while registrations by private buyers fell by 4.3 per cent to 59,639 units.
That, said the SMMT, reflected some easing of supply and evidence of how shortages last year distorted market performance.
Plug-ins are anticipated to comprise more than one in four new registrations this year, representing growth of 32.1 per cent or approximately 487,140 units and nearly a third (31 per cent) of the market in 2024 at 607,150 units.
However, the SMMT repeated its warning that the roll-out of infrastructure needed to charge them was failing to keep pace.
During the last quarter of 2022, the ratio of new chargepoint installations to new plug-in car registrations dropped to one for every 62 – a significant fall, it said, versus the same quarter last year, when the ratio was 1:42.4
As a result, in 2022, one standard public charger was installed for every 53 new plug-in cars registered – the weakest ratio since 2020.
The SMMT said the upcoming Budget was an opportunity to put in measures that supported the transition.
It wants to see VAT on public chargepoint use cut from 20 per cent to five per cent in line with home charging. That would ensure more affordable access for all and underpin a fair net zero transition, it said.
The SMMT also wants the government to review proposals to graft a vehicle excise duty regime designed for internal combustion cars on to zero-emission vehicles (ZEVs).
It said the higher production costs associated with EVs means that currently more than half of all available BEVs would be subject to the expensive car supplement due to apply to ZEVs from 2025.
Although it recognised that all drivers should pay their fair share, it said existing plans would unfairly penalise those making the switch, and risked disincentivising the market at the time when EV uptake should be encouraged.
SMMT chief executive Mike Hawes said: ‘The automotive industry is already delivering growth that bucks the national trend and is poised, with the right framework, to accelerate the decarbonisation of the UK economy.
‘The industry and market are in transition but fragile due to a challenging economic outlook, rising living costs and consumer anxiety over new technology.
‘We look to a Budget that will reaffirm the commitment to net zero and provide measures that drive green growth for the sector and the nation.’
He added: ‘The strong start to the year is mirrored in the latest market outlook, which anticipates 1.79 million new car registrations in 2023 – an 11.1 per cent increase on the past year but still well below 2019 levels.
‘This also represents a 0.8 per cent reduction on October’s outlook, against a weak economic backdrop.
‘However, a further 9.3 per cent increase is expected next year, with 1.96 million new cars expected to join the road in 2024.’
Crisis has to be contained
UK’s 2023 new car sales performance will heavily depend on how well the cost-of-living and energy crisis is handled.
Electric vehicles were the success story last year. For uptake to continue growing this year, it’s crucial the cost-of-living crisis is contained as the technology continues to command a premium over petrol and diesel models.
Jim Holder, editorial director, What Car?
A reassuring sign
Six consecutive months of year-on-year sales growth is a reassuring sign for the industry and highlights that despite the current political and economic turbulence, the new car market is running counter-cyclical to the wider economy.
However, the dip in electric car sales reveals that December’s record performance – when one in three new cars sold in the UK was electric – was artificially inflated due to Tesla’s huge quarterly vehicle delivery and the impact of annual manufacturer emissions targets rather than reflecting genuine consumer appetite at that level.
Ian Plummer, commercial director, Auto Trader
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