The UK new car market has achieved two straight years of solid growth, but fleet sales are continuing to prop up any progress.

The latest latest new car figures for July released by the Society of Motor Manufacturers & Traders (SMMT) showed overall registrations rising 2.5% in July to 147,517 units, a 24th consecutive month of positive results and contributing to a year-to-date rise of 5.5% with 1,154,260 new cars registered.

Dealing deeper into the figures, however, reveals a less positive story with the market totally reliant on fleet sales. The fleet sector was up 13% in July and 21% year-to-date, while private sales continued to slide – the only positive being the rate of decline, from 15% in June to 11.1% in July, 11.9% year-to-date.

The news for the battery-electric vehicle (BEV) sector was better, but only marginally so. Overall BEV registrations continued strong growth, up by 18.8%, taking a 18.5% market share in July. This was reflected in demand for BEVs among private buyers, which for the first time in very many months grew, though only by a marginal 0.9%.

Year-to-date private BEV demand is continuing to slide, 17.2% of sales being to private buyers compared to more than 20% in 2023, at a time when the rate should be ramping up – the Government has committed to a ban on combustion-engined car sales in 2030 and the Zero-Emission Vehicle (ZEV) mandate introduced this year is putting pressure on manufacturers to increase the BEV share of their sales.

Compared to recent months the market for PHEVs slowed in July, rising 12.4% (30% in June) to earn an 8.9% share. However year-to-date, BEVs have risen just 10.8% while PHEVs have jumped 28.2%. Full hybrids are enjoying a major resurgence too – registrations were up 31.4% in July to take their market share to 14.5%.

Responding to the figures the SMMT admitted that with zero emission vehicles mandated to comprise a minimum 22% of each brand’s new car registrations over the full year, the pace of transition needs to increase significantly – but current market conditions make any surge look increasingly unlikely.

Revised forecasts

The SMMT has revised its full-year industry forecast downwards, now predicting 1.968 million new car registrations by the end of the year and an anticipated BEV share of 18.5% down from the 19.8% expected in April.

Describing two years of new car market growth against a backdrop of a turbulent economy as testament to the sector’s resilience and the attractiveness of the deals on offer, SMMT chief executive Mike Hawes admitted, however, that weakening private retail demand, 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,” Hawes said.

“Achieving market transition at the pace demanded requires greater support for consumers and, with the all-important new numberplate month of September beckoning, action on incentives and infrastructure is needed now,” he added.

Industry figures have also expressed concern at the fleet slant to the figures.  Philip Nothard, insight director at Cox Automotive, argued that a heavy reliance on the fleet segment distorts reality and a healthy retail market is equally vital for manufacturers’ long-term profitability.

“Although BEV uptake is rising, it still falls short of mandated targets – however, the potential for BEVs is significant, and we expect them to play a major role in the market outlook for 2025,”  Nothard said.

“It is too soon to know what impact, if any, the new government’s growth plans will have on consumer confidence, though the Bank of England’s base rate reduction last week was a positive and welcome sign,” he added.

“Our baseline forecast is marginally more optimistic than the SMMT’s projections, but we continue to monitor movements closely and caution that Q4 could see some dramatic movements as manufacturers manoeuvre to avoid ZEV penalties.”

Lisa Watson, director of sales at Close Brothers Motor Finance, commented that the high upfront cost of EVs and the lack of affordable options continues to act as a barrier for motorists contemplating the switch from petrol and diesel cars, and further investment is required to bring the charging infrastructure up to scratch.

“However, our research amongst EV drivers found that the overwhelming majority (92%) of those who have made the switch to EV are happy with their car and would purchase another one – and 61% have saved money on running costs,” Watson added.

Kim Royds, mobility director at energy and services giant Centrica, said that the figures make clear that more work needs to be done to remove barriers to adoption and give drivers the confidence to make the switch to EVs.

“Without a doubt, tackling the inequality that exists between at home and public charging should remain a top priority – a large proportion of homeowners live without access to a driveway and therefore are restricted from unlocking the main benefits of going electric,” Royds said.

She added; “Creating at home and kerbside charge point solutions with affordable charging costs must be high on the list for industry leaders and policymakers to ensure that nobody is left behind – manufacturers and motorists will now be looking to the new government to provide new and updated incentives to encourage more people to make the change, which will be key to ensuring the Zero Emission Vehicle (ZEV) mandate is achievable.”