The UK new car market rose 10.4% in March, clocking up its 20th consecutive month of growth on the back of soaring demand.

EV market share fell by one percentage point

A total of 317,786 new cars reached the road with the new 24 plate, marking the best March since before the pandemic but with continued concerns for weak private demand and falling electric vehicle demand.

Registrations among larger fleets were up 29.6% year-on-year as the sector continues to recover following the constrained supply of previous years. Larger fleets now have a 57.1% share of the new car market compared to 48.6% a year ago, according to the new figures from the Society of Motor Manufacturers and Traders (SMMT).

But private buyer demand continued to fall back, dropping 7.7% due to a challenging economic backdrop of low growth, weak consumer confidence and high interest rates. Smaller, ‘business’ registrations to fleets with fewer than 25 vehicles were also down, declining 8.0%.

Combined fleet registrations totalled 189,314, up 27.4% from 148,608 in March 2023.

Electric vehicle demand failed to keep pace, both with the overall market growth and the requirements under the ZEV mandate.

While registrations of battery electric vehicle (BEV) registration were at their highest-ever recorded volume levels, the 3.8% rise compared to the overall 10.4% growth in the new car market saw their market share fell by one percentage point from the same month last year, down to 15.2% from 16.2% – some way short of the 22% required by carmakers to avoid penalties under the ZEV mandate this year. Only fleets showed any volume growth.

Uptake of hybrid electric vehicles (HEVs) reached record levels, rising by 19.6% to 44,550 units and 14.0% of the market, while the biggest percentage growth was recorded by plug-in hybrids, up by more than a third (36.7%) to 24,517 units, or 7.7% of all new registrations.

Petrol demand also remained high, with registrations up 9.2% year on year and retaining the lion’s share of the market at 55.7%. Diesel volumes fell 2.7% to account for just 7.3% of demand.

The SMMT said the fall in BEV market share within a growing market underscored the need for government to support consumers to go electric. While large fleets continue to drive BEV uptake, thanks to compelling tax incentives, the tough economic backdrop is making it ever more challenging for private drivers to invest in BEVs.

While carmakers are offering generous incentives, the industry body said this cannot be sustained indefinitely and reiterated its call for the UK to offer consumer incentives such as temporarily halving VAT on BEVs, revising the threshold for the expensive car supplement on Vehicle Excise Duty next April, and equalising VAT rates to 5% in line with home charging.

Mike Hawes, SMMT chief executive, said: “Manufacturers are providing compelling offers, but they can’t single-handedly fund the transition indefinitely. Government support for private consumers – not just business and fleets – would send a positive message and deliver a faster, fairer transition on time and on target.”

Concerted government support essential for EV switch

Many in the fleet sector have agreed with the SMMT’s call for government support for BEVs, following the lack of action in the recent Spring Budget.

Thom Groot, CEO of The Electric Car Scheme, said: “These statistics make grim reading for the EV industry, with BEV market share falling despite rising numbers of sales. If we are to reach our goals there needs to be a more concerted effort from government policy to push EV uptake and cut emissions. It also highlights the difficulties that Brits are still facing in making sustainable choices, our research shows that for 68% of the UK, price is the biggest barrier to switching to an electric car, far ahead of any other consideration.

“The Government is utterly failing to meet the targets they have set for themselves. The OBR has already significantly revised down its prediction from March 2023 in November, but we’re now behind even that. In 2024 to date, electric car uptake is more than 22 percentage points behind the March 2023 forecast, at barely 15% of total new car sales – woefully short of what is needed to reach 100% by 2035.”

Jon Lawes, managing director at Novuna Vehicle Solutions, said: “The [EV] transition is in danger of stalling without addressing the fundamental barriers to EV adoption, particularly after a lacklustre Spring Budget.

“Achieving the ZEV Mandate will prove increasingly difficult unless support measures for private buyers to make the switch are introduced, coupled with the sustained rollout of EV charging infrastructure, which remains unfit for purpose.”

And Kim Royds, mobility director at Centrica, said: “We must tackle the inequality that exists between at home and public charging. A significant number of homeowners don’t have access to a driveway and are therefore restricted from ease-of-use charging solutions to make their electric dream a reality. Creating at home and kerbside charge point solutions with affordable charging costs must be a priority for industry leaders and policy makers to ensure that nobody is left behind.”

But Nick Williams, managing director of Lex Autolease, had a different view: “While market share fell in March, I still believe this will be a pivotal year for electric vehicle adoption. With the 2024 ZEV target and tough competition from Chinese rivals bearing down on carmakers, many are reimagining their operations and creating partnerships to cut manufacturing costs and launch more affordable models.

“And we’re seeing appetite among private drivers grow at the same time. Our latest Future of Transport report found that two thirds of 17 to 35-year-olds are planning to make their next car electric, and that far fewer see costs as a barrier compared to their parents’ generation.

“While there’s still strong demand from both industry and drivers for more action from government to speed up adoption, we expect to see significant market growth this year.”

And EV consultancy New AutoMotive said the plateau in the BEV rollout was the result of a fall in Tesla’s UK sales. SMMT data shows the EV giant’s registrations were down 33% in March and 12% year to date.

New Automotive has predicted that if sales trends continue, we can expect to see EV sales to reach an average of 19% market share over the remaining nine months of the year – not far off the 22% target under the ZEV mandate.

Ben Nelmes, New AutoMotive CEO, said: “It’s great to see another 44,000 people opting for cleaner, cheaper transport by switching to an electric car. With electricity prices falling, the potential running cost savings of going electric are only going to get bigger, making going electric more attractive for people who do the most miles.

“The fact that companies are a little behind on their targets means we are likely to see improved marketing of electric cars, and growing discounts on some brands. Ministers should work with manufacturers to combat misinformation about electric cars to turn those targets into reality.”