The new car market has entered a second year of growth after a strong rise in sales last month but retail demand has softened.
New vehicle registrations surged 24.4 per cent in August to 85,657, the 13th consecutive month of growth, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
However, the market still remains 7.5 per cent below pre-pandemic levels and Ian Plummer, commercial director at Auto Trader, the online automotive marketplace, said there was a “clear divide in the market”, with the growth “almost exclusively fuelled by strongly rising fleet sales, while the proportion of retail sales is softening, underlining the pressure on consumers”.
August is also typically a quieter month with many buyers probably opting to wait until the new “73” number plates this month.
Last month registrations by large fleets rose 58.4 per cent to 51,951 units year on year and business registrations 39.4 per cent to 1,635 units, while private demand softened by 8.1 per cent to 32,071.
Plummer said that “after years of heavily constrained new car supply struggling to keep pace with consumer appetite, for the first time since the pandemic we’re seeing production exceed demand, which is shown by the flattening retail sales numbers”.
Demand for electrified vehicles continued to grow, accounting for almost four in ten new cars reaching the road. Battery electric vehicle uptake jumped by 72.3 per cent to take a 20.1 per cent market share, an August record and the highest since last December.
“The significant uptick in electric registrations is promising, but again, it continues to be propped up by fleet channels, as people take advantage of business-related tax benefits to buy,” Plummer added. “Without those advantages, the current £50,000 median price tag for a brand-new electric car is far beyond most retail car buyers’ budgets.”
The SMMT also warned that with fewer than four months to go until the expected introduction of a zero-emission vehicle mandate, industry still had “no sight” of the proposed regulation.
The mandate will require manufacturers to sell a certain proportion of zero-emission vehicles, with the proposed levels for new cars at 22 per cent by 2024, 80 per cent by 2030 and 100 per cent by 2035.
Mike Hawes, chief executive of the SMMT, said: “Businesses cannot plan on the basis of consultations, they need certainty. And now, more than ever, government must match action to ambition, ensuring there are the incentives and infrastructure in place to convince drivers to make the switch.”
The top three bestsellers last month were the Ford Puma, Tesla Model Y and Vauxhall Corsa selling 2,336, 2,313 and 1,941 units, respectively.
Mark Oakley, director of AA Cars, said the expansion of London’s ultra-low emission zone last month “pushed more drivers toward eco-friendly cars to dodge added fees. Whether this spurs more EV purchases is to be seen, but so far sales are considerably higher compared to last year.”
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New car market accelerates by nearly a quarter in August