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New car market forecast to top over TWO million in 2024 but ZEV mandate could hamper supply

  • Latest forecast shows two million new car registrations this year
  • New estimate based on strong Q1 registrations
  • But economic factors, general election and ZEV mandate could hamper positivity
  • Cox Automotive explains in its latest market update

Time 12:45 pm, April 29, 2024

The new car market is expected to top over two million registrations this year, but the ZEV mandate could put the brakes on new car supply.

That’s the latest forecast from Cox Automotive in its new Insight Quarterly publication, with the company telling Car Dealer that ‘there’s never been a more challenging time for dealers’.

Cox Automotive has revised its forecast upwards to two million and has suggested the market could even finish beyond 2.2 million in the most positive scenario.

The revision has been made due to the positive start to the year for new car registrations, which were up 10.4% year-on-year in Q1.

However, the firm is keen to temper expectations slightly as questions remain about the ZEV mandate’s effect on the sector, what will happen after the next general election, and when the market will finally return to its pre-pandemic normality.

The strong forecast has also be buoyed by expectations on economic stability in the second half of the year, alongside the imperative for manufacturers to gain market share while meeting ZEV mandate quotas.

Philip Nothard, insight director at Cox Automotive, told Car Dealer: ‘We’ve witnessed a positive start to 2024 in the UK’s new car market with a healthy jump in registrations, and our revised forecast does nothing to diminish that.

‘Dealers should be preparing for the increased volume of stock in the pipeline and asking themselves if they are ready for the greater number of EVs on their way to the used market.

“There’s never been a more challenging time for dealers. Now’s the time to focus on capitalising on sales opportunities afforded by the future increase in stock and adapting to shifting market dynamics, particularly in the EV segment.

‘Private EV adoption may be slow, but the ZEV mandate is pushing manufacturers to sell more regardless.

‘As the fuel-type forecast we launched at Car Dealer Live shows, EV and PHEV will reshape the used car parc in a relatively short amount of time. A potential change of government towards the end of this year could add to those challenges if that new administration takes a different direction.’

The need to hit the ZEV mandate could put the brakes on, though, with manufacturers turning to banking credits, or reducing volume to hit the 22% quota.

Nothard added: ‘The market is moving in the right direction; a gradual recovery could arguably be said to be underway. However, it’s important to acknowledge that significant challenges remain. We’re not quite out of the woods yet, and a full return to pre-pandemic levels might still take some time.

‘With the UK’s ICE ban deadline U-turn, a palpable lack of help for the sector in the most recent budget, such as the government addressing the VAT discrepancy between domestic and public charging, it may well be that an unintended consequence of the ZEV mandate could be a drop in the supply of new vehicles.

‘Manufacturers looking at the UK market may change tack and opt to put their cars into less stringent markets in other parts of the world. It’s still early days, but clarity on how the sector will react in the inaugural year of the mandate has yet to materialise.’

He concluded: ‘With an election looming, we will have to wait and see whether any new administration delivers the help needed to accelerate our sector’s overdue recovery.’

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.

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