The UK car market has shown signs of recovery in October, as new car registrations rose by 14.3% compared to the same month last year, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
Demand driven by fleet and business buyers
The SMMT reported that there were 153,529 new car registrations in October, up from 134,282 in October 2020. This was also 7.2% above the pre-pandemic level of 143,251 in October 2019, and the best October since 2018.
The growth was mainly driven by fleet and business buyers, who accounted for 64.6% of the market share, up from 58.4% in October 2020. Fleet registrations increased by 23.1% year-on-year, while business registrations rose by 30.4%. Private buyers, on the other hand, saw a decline of 1.7% in their demand.
The SMMT attributed the strong performance of the fleet and business sector to the lower “Benefit in Kind” taxation on electric vehicles (EVs), which incentivises them to switch to greener models.
EVs still lagging behind in market share
Despite the tax benefits, EVs still represented a small fraction of the overall market share, with battery electric vehicles (BEVs) accounting for 12.1% and plug-in hybrid vehicles (PHEVs) for 10.5%. The combined market share of BEVs and PHEVs was 22.6%, slightly lower than the 23.4% in September.
The SMMT said that the subdued growth of EVs was due to the lack of consumer incentives and infrastructure investment, which deterred private buyers from making the transition. It also warned that the UK was falling behind other European countries in terms of EV adoption, and urged the government to introduce more measures to support the sector.
Supply chain issues easing but challenges remain
The SMMT also reported that the supply chain issues that have plagued the car industry globally, such as the shortage of semiconductors, have been easing in recent months. This has allowed dealers to deliver more stock to customers and reduce the waiting times.
However, the SMMT cautioned that the supply chain situation was still fragile and uncertain, and that the industry faced other challenges such as rising energy costs, labour shortages, and the impact of Brexit. It also revised down its forecast for EV sales for this year and next year, citing the dependency on fleet and business buyers and the lack of consumer incentives.
The SMMT now expects the car market to grow by 19.6% this year, with 1.886 million units sold, and by 4.4% next year, with 1.970 million units sold. It also expects the market share of BEVs to reach 22.3% next year, with 439,000 units sold, down from the previous forecast of 23.1%.
