The UK’s new car market recorded its best February in two decades after registrations jumped 14 per cent, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
Some 84,886 vehicles rolled off factory lines last year, marking the sector’s 19th consecutive month of growth.
Demand was driven by fleets and businesses investing in new vehicles amid a slowdown in private uptake, the market share of which declined to 33.7 per cent.
Battery electric (BEV) and hybrid vehicle registrations also increased, with BEVs rising 21 per cent to account for 17.7 per cent of all registrations. However, hybrid market share was marginally smaller year-on-year, at 12.7 per cent.
Interest rate hikes and the high cost of making the switch from ICE-powered vehicles have deterred private buyers, while industry is calling for the government to address tax disparities for consumers in public and private electric car chargepoints, ahead of the Spring Budget.
“A faster, fairer market transition depends on more private buyers switching but the lack of significant incentives is holding back many,” the SMMT said.
“Tomorrow’s Budget is an opportunity for the Chancellor to stimulate demand by halving VAT on new EVs for three years, amending proposed Vehicle Excise Duty (VED) changes, and reducing VAT on public charging in line with home charging.”
Mike Hawes, SMMT Chief Executive, said: “The new car market’s ability to deliver growth continues with its best February for 20 years and this week’s budget is an opportunity to ensure that growth is greener.”
“Tackling the triple tax barrier as the market embarks on its busiest month of the year would boost EV demand, cutting carbon emissions and energising the economy. It will deliver a faster and fairer zero emission transition, putting Britain’s EV ambition back in the fast lane.”
Commenting on the figures, Lisa Watson, Director of Sales at Close Brothers Motor Finance, said: “Increased new car registrations continue to reflect consumer confidence returning to the market.
“However, as manufacturers aim to hit the Government’s target of 22 per cent of all new cars sold this year being electric, the data remains heavily skewed by fleet figures whilst private demand wanes. According to our research, only 12 per cent of buyers are planning to purchase an electric car – down from 14 per cent last year.”
She added: “Both consumers and manufacturers will be hoping that the Government’s Spring Statement will address concerns surrounding EV uptake, such as inadequate infrastructure, and contain incentives to encourage widespread EV adoption.”
Richard Peberdy, UK Head of Automotive for KPMG, said demand for new cars had continued to hold up “relatively well” despite ongoing pressure on household budgets and the higher cost of car finance.
“While the used EV market is growing, sales growth of new EVs to consumers has plateaued. Many in the car industry are looking to this week’s Budget and hoping that demand can be stimulated by the likes of cutting VAT on EV purchasing and at public charge points.”