Car sales up in July but demand for electric vehicles weakening

A new forecast issued by the Society of Motor Manufacturers and Traders estimates that pure electrics will take an 18.5 per cent market share in 2024.

In April the figure was expected to be 19.8 per cent.

The overall outlook for how many new cars will be registered this year has also fallen, from around 1,984,000 to 1,968,000.

In July the sector recorded its 24th consecutive month of year-on-year growth.

Some 147,517 new cars were registered last month, up 2.5 per cent from July 2023.

The increase was sustained entirely by purchases for fleets owned or leased by businesses or other organisations (up 13 per cent).

Uptake from private buyers continued to diminish, down 11.1 per cent.

Volkswagen was the best-selling brand for the month – up 7.5 per cent to 14,046.

Land Rover sales were up 13.2 per cent to 5,063 and Jaguar up 1.1 per cent to 1,058. JLR has its electric propulsion manufacturing centre at the I54, Wolverhampton, where drive units and engines are assembled.

MG, which has its head office at Longbridge but has its care made abroad, saw a 2.6 per cent rise to 6,231.

Top selling car for the month was the Kia Sportage at 3,999.

SMMT chief executive Mike Hawes said: "Two years of new car market growth against a backdrop of a turbulent economy is testament to the sector's resilience and the attractiveness of the deals on offer.

"Weakening private retail demand, however, particularly for electric vehicles 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, (or) else the UK's climate change ambitions are threatened and manufacturers' ability to hit regulated EV targets are at risk.

"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."

James Hosking, managing director of AA Cars, said: "The new car market is showing remarkable resilience, despite private and business sales falling.

“Fleet purchases continue to drive growth in the new car sector as companies take advantage of the stabilising economy to upgrade their vehicles.

“While private sales have taken a dip in recent months, there are encouraging signs on the horizon. The economic landscape is gradually improving, with inflation now stable at twoper cent and the boost from the Bank of England's recent interest rate cut. As these positive changes begin to impact personal finances, we anticipate more private buyers entering the market, leading to more balanced growth across all sectors."

Richard Peberdy, UK head of automotive for KPMG, said: “New car sales are up on this time last year, with fleets continuing to be the driver of growth in the market. Benefit-in-kind and salary sacrifice incentives for business have been the major driver of growth in EV sales and market share for some time now. The evidence increasingly suggests that accelerating private EV sales may require similar incentivisation, particularly if the government is going to reinstate the 2030 end to new petrol and diesel vehicle sales.

“While choices in the new car market are improving, EV prices and the scale and rate of price depreciation when buying from new remain major barriers to convincing consumers to buy a new EV. Subsequently, many consumers that are looking to transition to an EV are deciding that the used EV market is a more attractive way to do that.

"Despite used EV sales growing, the higher rate of stock that is currently coming into the used market is still pushing the price of some models down even further."

Ian Plummer, commercial director at online vehicle marketplace Auto Trader, said: "Overall, July marked another lacklustre month for the new car market, as the strong performance in fleet channels struggled to offset the ongoing retail decline.

"The bright spot is a strong consumer move to low-emission cars, which so far this year have accounted for almost half of all new car sales, up from around just one in 10 in 2019.

"Manufacturers are also working hard to tempt buyers with enticing offers, as shown by a 20 per cent rise in new car advert views on our platform in July.

"That offers some optimism as we approach the key plate change month of September."