The latest figures from the Society of Motor Manufacturers and Traders (SMMT) show that in total, 1.903 million new cars reached the road during 2023, representing a year-on-year increase of 17.9 per cent.
Fleet deliveries rebounded by 38.7 per cent year-on-year, while business registrations fell by -1.5 per cent. Private consumer demand remained stable at 817,673 units (down 0.1 per cent compared to 2022) with SMMT identifying cost of living pressures and high interest rates as constraining growth.
While the overall new car market remains -17.7 per cent below pre-pandemic levels, the surge in uptake compared with the previous year saw the value of new car sales increase over £10bn to around £70bn, with 288,991 additional vehicles reaching the road.
Buyers continue to show a preference for superminis, dual purpose and lower medium cars, which accounted for 29.8 per cent, 28.6 per cent and 28.2 per cent of the market respectively.
Registrations of hybrid electric vehicles (HEVs) were up 27.1 per cent to reach a 12.6 per cent market share, and plug-in hybrids (PHEVs) saw a 39.3 per cent increase to account for 7.4 per cent of the market.
Battery electric vehicle (BEV) uptake increased by almost 50,000 units with 314,687 new registrations. Overall, BEVs accounted for one in six new cars registered in 2023, with the majority taken by business and fleet buyers.
The industry is now calling on government to support private buyers by halving VAT on new BEVs for three years to give private consumers access to fiscal support at a level similar to that available to business buyers.
BEV uptake has risen almost 20-fold in the past five years, with the Treasury reaping a VAT windfall due to these vehicles having higher purchase costs than ICE models. SMMT asserts that halving VAT would give consumers an estimated additional £7.7bn in BEV buying power to the end of 2026, while reducing the Treasury’s tax take by 22 per cent per vehicle for each additional driver switching from an ICE to a BEV.
In a statement, Mike Hawes, SMMT chief executive, said, “With vehicle supply challenges fading, the new car market is building back with the best year since the pandemic. Energised by fleet investment, particularly in the latest EVs, the challenge for 2024 is to deliver a green recovery. Government has challenged the UK automotive sector with the world’s boldest transition timeline and is investing to ensure we are a major maker of electric vehicles. It must now help all drivers buy into this future, with consumer incentives that will make the UK the leading European market for ZEVs.”
Commenting on the findings, Levent Ergin, global chief ESG sustainability strategist at Informatica said: "2024 will now be pivotal for the automotive industry and all eyes will be on whether BEV adoption rates remain stable. The recent agreement with the EU to postpone the imposition of 10 per cent tariffs on EVs will likely have a positive impact as we head into the new year – and we could see this translate into an increase in EV registrations over the coming months.
"However, there is a sense that cautious optimism could be tempered by the challenges various ESG regulations will pose. In particular, imminent ISSB reporting requirements, the EU’s Corporate Reporting Sustainability Directive, and the upcoming EU battery passport – all will require manufacturers to have an even tighter handle over their supply chains. Understanding all their data – on suppliers, customers, usage, and charging points - will be pivotal to reporting on this.”
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