The UK new car market rose 1.0% in September with record EV registrations but the automotive sector has warned that growth is unstable and unsustainable without government action.

Unprecedented EV discounting propped up the September new car market

Latest Society of Motor Manufacturers and Traders (SMMT) data shows 275,239 new cars were registered in the all-important ‘74’ plate change month, marking the best September performance since 2020, but still 19.8% down on pre-Covid September 2019.

Growth, yet again, was driven by fleet purchases, up 3.7% to 149,095 units and representing 54.2% of the overall market versus 52.7% a year ago. Private consumer demand fell, by 1.8% to 120,272 units, accounting for 43.7% of registrations (44.9% a year ago), while the smaller business sector saw volumes fall 8.4% to 5,872 units.

September was also marked out by record registrations of battery electric vehicles (BEVs), up 24.4% to 56,387 units and with a 20.5% market share compared to 16.6% a year ago. This pushed the YTD market share to 17.8%, with 18.5% forecast by year end – still below the ZEV mandate.

But BEV uptake continues to be driven by business drivers. Fleet deliveries in September rose 36.8% to account for more than three-quarters (75.9%) of BEV registrations. Private BEV demand also rose, up 3.6% after unprecedented manufacturer discounting, but this was equivalent to just 410 additional registrations. Consumer demand for diesel grew at a faster rate, increasing 17.1% in September – a volume uplift of 1,367 units.

Year-to-date private BEV demand remains down 6.3% – underlining the scale of the challenge involved in moving the mass market to meet the ZEV mandate targets, which the SMMT said were set under market assumptions that have not come to fruition.

The trade body also warned that the record BEV uptake was driven by massive manufacturer discounting and has said that this is not sustainable as it again calls on the Government to provide incentives.

The SMMT calculates that manufacturers are on course to spend at least £2bn on discounting EVs this year to drive uptake – a situation that’s “untenable and threatens manufacturer and retailer viability”.

For this reason, the SMMT, along with 12 major vehicle manufacturers representing more than 75% of the market, have today written to the Chancellor calling for measures to support consumers and help speed up the pace of the EV transition.

These include temporarily halving VAT on new BEV purchases; scrapping the VED ‘expensive car’ tax supplement for BEVs, due next year; equalising VAT on public charging to match the 5% home charging rate; and mandating infrastructure targets to support those who cannot charge at home.

Ahead of the Autumn Budget, the SMMT and carmakers have also stressed that the Government must maintain and extend the business incentives currently helping to drive BEV uptake, including Benefit-in-Kind which supports company cars and those on salary sacrifice schemes, and the important Plug-in Van Grant.

Mike Hawes, SMMT chief executive, said: “While we appreciate the pressures on the public purse, the Chancellor must use the forthcoming Budget to introduce bold measures on consumer support and infrastructure to get the transition back on track, and with it the economic growth and environmental benefits we all crave.”

Act now to sustain the BEV transition, warns BVRLA 

Industry says the Government must come up with a long-term strategy to support the BEV market

Echoing the SMMT’s comments, the BVRLA also spotlighted that the much-needed momentum in BEV registrations was down to heavy discounting from manufacturers and sustained investment from business fleets.

Gerry Keaney, BVRLA chief executive, said: “This growth is welcome but will remain unstable and unsustainable unless the Government comes up with a long-term strategy for supporting the BEV market towards its ambitious ZEV mandate and phase out targets.

“Collapsing used BEV values – down 60% over two years and forecast to continue falling – have already led to an anticipated loss of 220,000 new EV sales. That ground now needs to be made up. Falling used values are eroding the confidence of fleet buyers and making the most popular way of financing a new electric car more expensive.

“We need used EV-targeted grants, tax incentives and a confidence-building communication campaign to boost retail demand and stabilise prices.”

Novuna Vehicle Solutions has also urged the Government to take action in the Autumn Budget, which it says will be the first real test of Labour’s commitment to the BEV transition.

Jon Lawes, managing director at the leasing giant, said sustained momentum to attract the personal leasing sector relies on making the switch more accessible.

“Building a stronger second-hand marketplace by boosting demand for used EVs is one of the key areas which must be addressed to achieve the EV transition at scale. It’s vital policymakers take bold action to reinforce business and consumer confidence in the long-term feasibility of the EV ecosystem.”

And Ian Plummer, commercial director at Auto Trader, said:  “There’s still much to do to drive further levels of interest and actual sales – and discounts can only last so long. Given affordability is such a key driver of purchase, other measures are needed to help buyers make the switch to electric cars, which still carry a 30% price premium over their ICE counterparts. More affordable EVs are hitting the market from both established and new brands alike, but we need to see further levels of support from government if we’re to hit the new regulatory targets without inflicting significant damage to the industry.”

Many industry stakeholders have yet again called for action on charging too.

Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said: “As well as price, the overriding concerns on access to electric vehicle charging points remain consistent – our Deloitte consumer tracker found that those who have access to off street parking charging points are twice as likely to consider an EV than those who don’t.

“As the market continues to offer incentives to encourage the sale of more electric vehicles, it is important to consider, at the same time, the faster rollout of public charging points.”