The UK new car market continued to rebound in July, rising 28.3% as a result of rocketing demand for fleet cars and electric vehicles.

The new car market rose 28.3% in July to record a full year of-stop growth

A total of 143,921 new vehicles were registered last month, according to latest figures from the Society of Motor Manufacturers and Traders (SMMT), marking the 12^th consecutive month of growth for the market despite challenging economic conditions. It was the best July performance since 2020, when pent-up demand for new cars was unleashed following three months of lockdown during the pandemic.

Fleet registrations rocketed 61.9%, from 50,014 units to 80,961 last month, as supply chain challenges eased. Smaller business fleets – companies with fewer than 25 vehicles – also helped drive the market, rising 28.7% from 2,265 to 2,915 units. Together, the two have risen 60.4% and account for 58.3% of the market.

Private registrations meanwhile plateaued with a 0.3% rise to 60,045 units, holding just 41.7% of the new car market.

Electric car demand continued to surge, hand in hand with the rise in fleet registrations.

Battery electric vehicles (BEVs) recorded an 87.9% increase to account for 16.0% of all new registrations for the month, broadly in line with the share so far this year. Surging demand meant a new BEV was registered every 60 seconds in the month – and that’s expected to accelerate to one every 50 seconds by the end of the year, and up to one every 40 seconds by the end of 2024.

Plug-in hybrid (PHEV) registrations saw a significant uplift for the second month in a row, as uptake rose 79.1% to 11,702 units, accounting for 8.1% of the market.

Hybrid (HEV) volumes grew, although their overall market share fell to 11.3%. As a whole, electrified vehicles (not including mild hybrids) accounted for more than a third (35.4% of the market).

The best seller league table for July reveals the Ford Puma, Kia Sportage and Nissan Qashqai topped sales.

For the first seven months of the year, the new car market rose 19.6% to 1,093,641 units. Fleet demand rocketed 41.3%, smaller business registrations surged 21.9% but private buyer uptake increased just 1.5%.

The year-to-date figures also show that BEV demand was up 38.0% to 175,978 units, giving a 16.1% share, PHEVs up 27.8% (73,857 units; 6.8% share) and HEVs up 12.4% (135,991 units; 12.4% share).

The SMMT said the growth in electric vehicles hitting UK roads was significant but must move faster to enable the UK to meet ambitious but necessary environmental targets. It continues to call for a range of measures – from fiscal incentives to purchase reassurance – to ensure the market, particularly private drivers, has the confidence to switch.

The auto sector trade body also reiterated its call for an overarching charging strategy, including a charge point mandate, “to create the reliable, accessible and affordable charging network consumers deserve”.

It points to latest charge point installation data, which shows that a record high of 3,056 new standard public chargers were installed in the last quarter – equal to one new charger for every 35 new plug-in vehicles registered, up significantly on the ratio of one for every 58 cars in the same quarter last year.

But it warns that the installation rate must treble to almost 10,000 chargers per quarter, every quarter, to reach the Government’s minimum target of 300,000 charge points by 2030.

Mike Hawes, SMMT chief executive, said: “Choice and innovation in the market are growing, so it’s encouraging to see more people switching on to the benefits of driving electric. With inflation, rising costs of living and a zero-emission vehicle mandate that will dictate the market coming next year, however, consumers must be given every possible incentive to buy. Government must pull every lever, therefore, to make buying, running and, especially, charging an EV affordable and practical for every driver in every part of the country.”

Gav Murray, director of EVs at British Gas, also called for action on charging.

“The inequality of charging infrastructure across the country means millions of people can’t chose to adopt EVs because they can’t access adequate charging facilities. Those who do have access to public chargers face unfair costs for their use,” he elaborated.

“We need to see VAT on public chargers – currently four times higher than the rate paid by those able to charge at home – cut to the point of parity, so not discriminating against people who want an EV, but have to rely on public charge points.”

Novuna Vehicle Solutions, meanwhile, warned of the impact of a possible U-turn over EV targets.

According to reports, targets in the upcoming ZEV mandate could be watered down on the back of lobbying by carmakers.

Jon Lawes, managing director at Novuna, said: “Recent calls to dilute net zero targets are creating a level of uncertainty detrimental to driver appetite for EVs and the industry’s propensity to deliver a zero emissions future.

“Jaguar Land Rover’s investment in a much-needed electric car battery gigafactory illustrates the enormous benefits on offer when business has confidence in the UK’s transition. Yet, any uncertainty around the direction of travel the Government is taking threatens to undermine momentum as 2030 approaches.

“Crucially, the Government must not only stand firm on the ZEV mandate to provide clarity to OEMs but also accelerate investment in public charge points and address the insufficient grid capacity needed to give businesses and consumers the confidence to make the switch.”

Market outlook up for 2023 but down for 2024

The latest market outlook for the new car sector now anticipates overall registrations to reach 1.847 million by the end of the year, up 0.9% on expectations in April. Of these, BEVs are expected to take a 17.8% market share or 330,000 units, a slight decrease on April’s outlook, while PHEVs are set to achieve 7.2% of the market with 134,000 units.

However, the outlook for 2024 has been downgraded marginally, down 0.7% to 1.951 million units on the back of wider concerns about the cost of living. BEVs are expected to achieve an overall 22.6% market share next year, reaching 440,000 units. Some 155,000 PHEVs are anticipated to be registered, taking 7.9% of the market and meaning plug-in vehicles are likely to account for three in every 10 new cars registered in 2024.