9:53 am, August 19, 2024
The last three months of 2024 new car sales will be fuelled by over-supply of some models and a lack of demand for others.
That looks set to lead to some heavy discounting of electric models and a restricted supply of petrol cars as manufacturers clamour to meet their electric car targets.
Several major manufacturers including JLR, Ford, Volkswagen, Toyota and Renault are a long way behind the ZEV mandate target that says 22% of new cars sold in 2024 must be battery-electric, with major fines applicable if they fail to hit targets.
The target will increase to 28% next year, 52% in 2028 and 80% in 2030, reaching 100% by 2035.
However, being at a transition point in manufacturing cycles for a number of manufacturers, the target for 2024 is looking impossible to meet.
JLR, for example, is migrating towards an electric-only Jaguar to offset emissions from its Land Rover brand, but the new models have yet to arrive.
The move will lead to a number of car manufacturers withholding stock to avoid fines, while already the market is being flooded with never-before-seen deals on electric cars, making EVs cheaper than their petrol equivalents in extreme circumstances.
For example, some dealers are offering a new Nissan Leaf for only a £1,000 deposit and less than £200 a month on PCP, which is comparable with a Juke.
MG Motor UK is one of only a handful of companies offering both petrol and EV cars that falls within the target boundaries.
Commercial director Guy Pigounakis told Car Dealer: ‘We’ve had a big focus on electric cars at MG since we first launched the ZS EV.
‘However, we’ve changed our strategy in some ways as it’s quite clear that not all customers are wanting to buy electric cars at the moment.
‘Full hybrids and mild hybrids are also popular but don’t get the same ZEV credits.’
He added: ‘I think we’re going to see a very unusual end to the year. Several manufacturers are hinting that they’re going to withhold supply of petrol models in Q4 to help towards ZEV mandate targets.
‘It’s going to be a very unusual September as well this year, led by consumer offers and manufacturer-controlled supply.
‘We’re in a fortunate position with MG because we’ve got a strong electric vehicle customer base, which means cars like the new MG3 Hybrid+ will be coming on stream at the same time as other carmakers are limited non-EV supplies.
‘It’ll put our dealers in a good position to meet what customers want rather than what the ZEV mandate defines.’
But Pigounakis remains cautious about the future. He believes over-supply in the car market is going to become a problem of a scale not seen for more than a decade.
‘You only have to look at the number of last-day registrations in the summer months to see that over-supply is back,’ he said.
‘Gone are the days of Covid and semiconductor-related restrictions to the automotive supply chain.
‘We’re now back in a market where there are more cars than demand, at least of certain types, and it’s leading us back to the days of late-month pre-registrations to meet volume targets.
Guy Pigounakis believes over-supply in the car market is going to become a massive problem
‘We also have a highly unusual scenario in the industry where we have plenty of demand for certain types of car – the buyers are there and the cars are there – but to register them this year will be of negative impact to the manufacturers, so some brands are withholding stock from dealers.
‘It’ll be a temporary fix, but it won’t solve the problem as those cars will still be there next year when the ZEV targets are higher.’
SMMT chief executive Mike Hawes said an absence of government incentives for private buyers was having a marked effect on
demand for battery-powered cars.
One area where he thinks this could be improved is to remove the additional ‘luxury car tax’ surcharge applied to vehicles costing more than £40,000 to incentivise their purchase.
Battery-powered cars are exempt from the levy until January 1, 2025, but from that date onwards they’ll be treated and taxed like all other cars.
‘Although attractive deals on EVs are in place, manufacturers cannot fund the mass market transition single-handedly,’ he said.
‘Temporarily cutting VAT, treating EVs as fiscally mainstream, not luxury vehicles, and taking steps to instil consumer confidence in the chargepoint network will drive the market growth on which Britain’s net zero ambition depends.’
