UK new car registrations rose by 1.2% in August, ending five months of decline but with the fleet market still down.

The UK new car registration growth, albeit being a marginal 1.2%, is the first seen since February

A total of 68,858 units were registered last month – the first growth seen since February despite August traditionally being a quiet pre-plate change month.

‘Business’ registrations to companies with fewer than 25 vehicles saw the most growth: up 26.6% to 1,199 units. Private registrations increased 3.2% to 34,865 units. But registrations to larger fleets fell 1.6% to 32,794; possibly still due to vehicles being prioritised to higher-margin customers.

The Society of Motor Manufacturers and Traders (SMMT) said that overall growth in the month was driven primarily by battery electric vehicles (BEVs), which recorded a 35.4% increase in volumes and a 14.5% market share.

But it noted that growth in this segment is slowing, with a year-to-date increase of 48.8%, whereas at the end of Q1, BEV registrations had been up by 101.9%.

Plug-in hybrid (PHEV) registrations fell by 23.1% in August to account for 5.6% of monthly registrations. Along with the BEV figures, this means plug-in vehicles accounted for one in five (20.2%) of August’s registrations.

Hybrid electric vehicle registrations remained relatively stable, falling by 0.7%.

But despite the overall growth in the market, the SMMT noted that August volumes were still the weakest for the month, bar 2021, since 2013 – and warned that supply chain pressures continue to constrain the market.

It also highlighted that overall year-to-date figures are down 10.7% on last year at 983,099 units and 35.3% down on pre-pandemic 2019.

Mike Hawes, SMMT chief executive, said the figures show the scale of the challenge ahead in terms of recovery.

He continued: “Spiralling energy costs and inflation on top of sustained supply chain challenges are piling even more pressure on the automotive industry’s post-pandemic recovery, and we urgently need the new Prime Minister to tackle these challenges and restore confidence and sustainable growth.

“With September traditionally a bumper time for new car uptake, the next month will be the true barometer of industry recovery as it accelerates the transition to zero emission mobility despite the myriad challenges.”

EY said the figures show green shoots for the UK car industry, despite the ongoing ‘trilemma’ of financial, energy and supply chain pressures that has automotive at the centre of the storm.

David Borland, EY UK & Ireland automotive leader, outlined: “Positively, production levels in the major markets are showing an upward trend, with demand for semi-conductors dropping due to the cost of living and inflation rises reducing consumer demand for big-ticket purchases like personal computers and electronics.”

But the company noted that the market is far from a bed of roses for carmakers at the moment and highlighted that one British luxury car maker reported a H1 pre-tax loss of £285m while another global automaker made 3,000 roles redundant in August as part of their cost rationalisation measures.

EY also added that urgent action “is needed to bring down the high energy costs faced by automotive factories if their competitiveness is to be sustained. A clear challenge for the new Prime Minister.”

Significant challenges for EVs ahead

August’s robust growth in EV registrations, despite continued long lead times, was welcomed across the board – but with some warnings for the new PM and the Government not to rest on their laurels.

Jon Lawes, managing director, Novuna Vehicle Solutions, said: “Despite the new Conservative leader’s daunting in-tray, it is crucial we see firm, swift action to support the automotive sector across the board including further significant public charging infrastructure investment and incentives for drivers to ramp up the transition to zero-emission mobility by 2030.

“We would urge the incoming leadership to maintain favourable tax incentives that have been successful in boosting EV uptake to date, such as salary sacrifice, whilst devoting significant resource to improving the charging infrastructure, which remains a barrier for millions of motorists looking to transition to an EV with confidence.”

Meanwhile, Lex Autolease said that the “ascendency of EV registrations has been a bright light in a relatively gloomy picture for new car registrations this year”. But warned of significant challenges ahead this autumn.

Meryem Brassington, electrification propositions lead, commented: “EV drivers face a substantial uplift in charging costs due to the energy price cap increase and further clarity is needed on company car tax tables beyond 2025 to give fleet managers the insights they need to make long-term purchasing decisions.

“As the new Prime Minister prepares to make their way through an already busy in-tray, it’s vital that policymakers continue to support the transition to an electric future and give drivers and businesses the confidence to make the switch to a zero-emission vehicle. The Government’s new £20m charge point scheme is another step in the right direction and all eyes will be on further support and funding to be announced before the year is out.”

And Henry Duff, director of net zero at British Gas, also said work must ensure that the UK’s charging network is ready for drivers to access reliable, convenient and easy-to-operate charge points.

“Significant inroads have already been made to install charge points at work and leisure destinations, but the roll-out of chargers closer to drivers’ homes will unlock the potential for many more EVs being adopted.”

It’s a sentiment echoed by EV charging firm Easee.

Charlie O’Donoghue, head of product at the company, commented: “It’s clear that consumers are moving towards an electric-powered future on the road.

“As the new PM enters No 10 tonight they must hold their nerve on net zero and put boosting EV infrastructure right at the heart of their agenda to support the roll-out of EVs right across the country and reach the 2030 target.”

A final word from Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, who said: “The need of the hour is to increase investment in gigafactories within the UK.

“Europe, led by Germany and France, have announced approximately 35 new gigafactories to be operational by 2035. As more car manufacturers partner with battery suppliers around the world, the UK needs to ensure it remains a destination of choice by making the investment now.”