The automotive sector in the United Kingdom is currently experiencing a period of substantial growth, with some potential concerns looming for the year 2024. According to the Society of Motor Manufacturers and Traders (SMMT), there were 142,876 new car registrations in January 2024, marking an impressive 8.2% year-on-year increase and the 18th consecutive month of growth.
David Borland, the EY UK & Ireland Automotive Leader, has commented on these figures, emphasizing the significant role played by Battery Electric Vehicle (BEV) registrations, which saw a 21% year-on-year increase, and Plug-in Hybrid Electric Vehicle (PHEV) registrations, which rose by 31.1% compared to January 2023. The rise in BEV sales has contributed to reaching the milestone of one million sales in the UK. However, it is noteworthy that the market share for BEVs dropped to less than 15% for the first time in a year, indicating the challenge faced by Original Equipment Manufacturers (OEMs) in meeting the target of 22% of sales accounted for by Zero Emissions Vehicles (ZEVs) under the ZEV Mandate.
Fleet sales were the primary driver behind the growth in January, increasing by 29.9% year-on-year, while retail sales saw a decline of 15.8%. This shift means that almost two-thirds of cars sold were to the fleet, compared to the traditional 50/50 split between fleet and retail. This poses a challenge for manufacturers in terms of maintaining a sustainably profitable channel mix.
Despite these challenges, there is positive news on the supply side, with manufacturing growth for 2023 reaching 17%, the best year since 2019. The deferral of the ‘rules of origin’ legislation is expected to further boost automotive manufacturing in the UK and continental Europe.
Looking ahead, Borland believes that the automotive market is poised for further volume increases in 2024, despite potential economic and regulatory hurdles. The sector’s upward momentum, combined with the heightened competition from new market entrants, presents an opportunity for the UK car industry to showcase its resilience and innovation in the coming year.
As the automotive industry continues to grow, it is crucial for stakeholders to address the challenges posed by evolving consumer preferences, regulatory changes, and market dynamics. By leveraging innovation and sustainability, the UK automotive industry can navigate the uncertainties of 2024 and emerge stronger and more competitive in the global market.
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