New cars at unnamed dock, via PANew cars at unnamed dock, via PA


2023 was new car industry’s best year since before pandemic with record volume for BEVs

  • New car registrations reached 1.903m in 2023 – up 17.9% as fleet investment accelerated
  • Battery-electric vehicle volumes reached record high but market share slipped to 16.5%
  • SMMT urges government to halve VAT on BEVs for three years
  • It says that would put another 270,000 zero-emission vehicles on road

Time 12:21 pm, January 5, 2024

2023 ended with the new car market registering 17 consecutive months of growth and its best year since 2019.

A total of 1.903m new cars reached UK roads last year, the SMMT said this morning, which was a 17.9% rise on 2022’s total.

Battery-electric vehicle (BEV) sales rose by 17.8% from 267,204 to 314,687 to reach a record volume, although conversely their market share dropped by 0.1 of a percentage point to 16.5%.

It meant, however, that 2023 saw more BEVs reach the road than 2020 and 2021 together, which saw a combined total of 298,932.

Plug-in hybrid vehicles (PHEV) saw their market share rise from 6.3% to 7.4%, with sales going up by 39.3% from 101,414 units to 141,311.

And hybrid-electric vehicles (HEV) increased their market share by a percentage point over the year, rising to 12.6% with a 27.1% increase in sales from 187,948 to 238,942 cars.

Petrol-powered cars saw a 13.5% rise in sales from 682,472 to 774,484, but that wasn’t enough to stop their market share dropping from 42.3% in 2022 to 40.7%.

However, diesel’s market share dipped – down from 5.1% to 3.8% – as did its sales, which fell by 13.8% from 82,981 in 2022 to 71,501 last year.

Growth across the market was driven entirely by fleet investment after the previous year’s supply constraints faded and helped fulfil pent-up demand, said the SMMT.

Fleet deliveries rebounded by 38.7% year on year at 1,041,350, taking 54.7% of the market share, while business registrations, a small proportion of the market, fell by 1.5% to 44,031 and accounting for 2.3% of the market.

Meanwhile, private consumer sales dipped slightly by 0.1% to 817,673 units and a 43.0% market share.

It followed their strong recovery in 2022, with cost-of-living pressures and high interest rates constraining growth.

Last September, the government performed a sudden U-turn by postponing the 2030 ban on sales of new petrol and diesel cars to 2035.

Meanwhile, the zero-emission vehicle (ZEV) mandate came into force at the beginning of this month, which the SMMT expects to bolster the EV market further.

However, the trade body also believes that the next few months are likely to be volatile because of regulatory uncertainties that have hit the market over the past few months.

It highlighted last month’s last-minute deal on the UK-EU rules of origin, which avoids tariffs on EVs but has made planning difficult.

Lisa Watson, director of sales at Close Brothers Motor Finance, commented: ‘The introduction of the new ZEV mandate, which requires 22% of new cars sold to be emission-free, may cause headaches for manufacturers.

‘Consumers continue to be put off by high EV purchase costs and a lack of infrastructure.

‘More will need to be done to incentivise widespread EV adoption if the new ZEV mandate and revised 2035 ban on new petrol and diesel vehicles are to be successful.

‘For now, dealers will need to utilise all tools at their disposal to make sure forecourts are adequately stocked to meet drivers’ demands.’

AA Cars director Mark Oakley said: ‘The new car market ended 2023 on a high, having weathered a turbulent economic backdrop, with total sales finishing nearly 18% higher than 2022.

‘The industry should celebrate a remarkable 17 straight months of rising sales, buoyed by the increasing number of new cars rolling off production lines and strong demand from drivers.

‘Further falls in inflation should strengthen consumer confidence in 2024, helping brighten the prospects for dealers in the year ahead.

‘However to keep the momentum going, manufacturers must continue to adapt to changing trends and the increasing take-up of EVs.’

Ian Plummer, commercial director at Auto Trader, said: ‘The growth in electric vehicles hitting UK roads in 2023 is incredibly positive news and the prospect of lower prices this year will only encourage more drivers to make the switch in 2024.

‘The combination of new government targets like the ZEV mandate and the rise of competitors like BYD will put pressure on the automotive industry to cut their prices sharply to spur on flagging retail demand.

‘But there’s also a clear role for the government to play in helping consumers to go electric, and as VAT cuts in other countries seem so successful, they seem like an obvious route to take.’

The SMMT is predicting that 1.97m cars will be sold this year, including 439,000 electric cars. It wants the government to halve VAT on BEVs for three years, which it says will give private buyers fiscal support at a level similar to that of business buyers.

Doing so would put another 250,000-plus ZEVs on the UK’s roads, it said.

The SMMT also pointed out that since the end of the plug-in car grant in June 2022, the UK was the only major European market with no consumer BEV purchase incentives – but it was now also the only market with mandated minimum targets for new ZEV registrations.

SMMT chief executive Mike Hawes 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.

‘The 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 zero-emission vehicles.’

John Veichmanis, CEO of Carwow, said: ‘It’s great to see that 2023 ended on a high with the strongest year for the new car market since the pandemic.

‘It’s even more promising to see that battery-electric vehicle uptake reached a record volume and more BEVs reached roads than the previous two years together.

‘Despite this, the growth in BEV registrations is still largely driven by business and fleet buyers. Just one in 11 private buyers chose a BEV.

‘With private buyers not benefiting from the same compelling tax incentives, the government must look at what can be done to encourage people to switch to electric vehicles.

‘There is clearly more to be done through financial incentives, clear communication from government and confidence in the charging network.’

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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