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Simon Whicher, Sales Director, Cooper Solutions comments on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures for July 2023.
New car registrations reached 143,921 in July1, a 28.3% year-on-year increase, marking the twelfth consecutive month of growth, highlighting the automotive industry’s resilience.
Electric Vehicles (EVs) and fleet sales continue to play a significant role in this recovery. Fleet registrations were up 61.9% year-on-year, while business registrations rose 28.7%. Private registrations meanwhile saw modest 0.3% growth.
The increase in EV sales is a consistent trend. Battery Electric Vehicles (87.9%), Plug-in Hybrid Electric Vehicles (79.1%) and Hybrid Electric Vehicles (18.9%) all saw significant year-on-year growth.
Sales growth has been boosted by manufacturers’ investments in new product portfolios, largely driven by the Government’s target of a 2030 combustion engine sales ban and the upcoming Zero Emission Vehicle (ZEV) mandate.
The debate over a potential timing change of the sales ban presents a significant challenge for the industry, which needs time to address changes given the long lead time for the development, ramp up and ownership cycle of new products.
The ZEV mandate is planned to start in 2024, which will require manufacturers to sell a minimum 22% ZEVs or face financial penalties. With many manufacturers beginning to place a sharper focus on that target, in Q4 we may see an increase of combustion engine vehicles sales and a fall in Battery Electric Vehicle (BEV) sales, as manufacturers develop strategies to maximise their chances of adhering to regulations next year.
In another challenge to the Electric Vehicle (EV) transition, recently published data shows that in the first half of 2023, 29 out of the 30 biggest depreciating used cars were electric.2
With the EU also reporting that BEVs overtook diesel market share in June for the first time, it is clear that the direction of travel is to a low emission car fleet, but there will continue to be short and long-term challenges to manage.
The sector is currently in earnings season, with quarterly results around the globe and in the UK from Original Equipment Manufacturers (OEMs) and dealers generally being very positive. However, the challenge continues for traditional OEMs to generate profit through EVs due to the levels of investment required, higher commodity costs and the need to compete on price with new market players.