The UK’s new car market saw a slight growth in May, with registrations up 1.6% year-on-year to 150,070 units, according to the latest data from the Society of Motor Manufacturers and Traders (SMMT). This was the strongest May performance since 2021, although figures are still nearly a fifth below pre-pandemic levels from 2019.
The growth was largely driven by fleets and business buyers, whose registrations increased by 3.7% and 14.4% respectively, together accounting for 62.6% of the market. On the flip side of this, private demand dropped again, falling 2.3% after a similar decline in April.
Traditional petrol and diesel models continued their downward trend, with double-digit drops of 12.5% and 15.5% respectively. However, the shift towards electrified vehicles definitely increased. Hybrids (HEVs) rose by 6.8%, plug-in hybrids (PHEVs) went up 50.8%, and battery electric vehicles (BEVs) increased 25.8%, making up 21.8% of the market.
Despite the growth, BEV sales still fall short of regulatory expectations. Year-to-date, they represent just 20.9% of new registrations, which is well below the 28% mandated by the government’s ZEV Mandate. Even with discounts and new model launches, uptake isn’t keeping pace.
The SMMT says more needs to be done to encourage EV adoption. Proposals include cutting VAT on new EV purchases by half, which could put an extra 267,000 electric cars on the road over the next three years. The group also calls for an overhaul of vehicle tax rules to exempt EVs from the VED Expensive Car Supplement and align VAT rates for public and home charging.
“A return to growth for new car registrations in May is welcome but manufacturer discounting on new products continues to underpin the market, notably for electric vehicles. This cannot be sustained indefinitely as it undermines the ability of companies to invest in new product development – investments which are integral to the decarbonisation of all road transport. Next week’s Spending Review is the opportunity for government to double down on its commitments to Net Zero by driving demand through fiscal measures that boost the market and shore up our competitiveness.”
Mike Hawes, SMMT Chief Executive