Increasing new car demand from business and fleet customers masked poor private registrations totals in May, as the overall new car market grew by a modest 2% in last month.
The Society of Motor Manufacturers and Traders (SMMT) reports that close to 148,000 new cars were registered in the UK in May. The lobbying body adds that it was the best May market performance since 2021, although this registrations result is still 20% lower than the sales total in pre-pandemic May 2019.
New business and fleet registrations grew by 10% and 14% respectively last month, while private new car sales continued to struggle and fell by 13% year-on-year. Private sales account for just 38% of the new car market for 2024 as a whole, while fleet registrations now have a market share of 60%.
Why are private new car sales decreasing?
Consumer new car sales have been sliding since about halfway through the last decade (peaked in 2015/2016), but the slowdown seems to be accelerating in recent months. It affects all types of new cars, and certainly not just EVs as certain national newspapers would love you to believe.
Unless anything radical changes (even more radical than a rout of the current government at the coming election), this trend is going to continue. New car prices are very high, and interest rates are higher than they’ve been for the last 15 years. Inflation on most consumer bills is squeezing household budgets, so buying a new car is getting harder for many people. Car finance terms are getting longer, so people are changing their cars less often. And so sales keep on falling.
Fleet sales are doing well, continuing their recovery from the depths of Covid. Whether this continues in the longer term remains to be seen.
EV uptake increases, but PHEV sales more impressive in May
Following on from a fairly promising 11% EV increase year-on-year in April, the electric car market grew by 6% in May when compared to the same month last year.
EV registrations totalled just over 26,000 last month, as the EV market share holds at 16% for 2024 as a whole. That said, the SMMT adds that the fleet customers are driving this increasing demand, as demand for new private EVs fell by 2%.
EV uptake continues to grow, but is still behind government targets. The Vehicle Emissions Trading Scheme demands that 22% of new vehicles sold this year by each brand must be zero emission.
As the year progresses, we expect to see fiercer discounting on electric cars as car manufacturers scramble to hit their mandate targets and avoid large government fines. It’s a good bet that fleet customers, in particular, will be content to wait a bit longer where possible to get better deals before committing to large EV orders.
While not as popular as the electric car market, the PHEV (plug-in hybrid) sector had much more promising results in May, as sales grew by 32% year-on-year. To increase electric car demand, the SMMT is now calling for the incoming government to provide private consumers with meaningful purchase incentives, suggesting a cut in the VAT levied on public charging from 20% to 5%.
Good month, bad month
The overall market was up just 2% on last May, but there was significant variation between the manufacturers’ performances.
It was a strong month for Alfa Romeo, BMW, BYD, Cupra, GWM Ora, Honda, Jeep, Land Rover, Mercedes-Benz, MG, Renault, SEAT, Skoda, Smart, Volkswagen and Volvo. All of these brands outperformed the overall market by at least 10%.
The news wasn’t so good for Alpine, Audi, Bentley, DS Automobiles, Fiat, Ford, Genesis, Lexus, Maserati, Mini, Peugeot, Polestar, Porsche, Tesla, Toyota or Vauxhall, who were all at least 10% below the overall market – meaning they sold the same or fewer cars than last May.
That leaves Abarth, Citroen, Dacia, Hyundai, Jaguar, Kia, Mazda, Nissan, and Suzuki who all pretty much held steady, being within plus or minus 10% of the overall new car market.
Volkswagen continued to be the UK’s best-selling car brand in May, ahead of Audi, BMW, Kia and Mercedes-Benz.
Kia Sportage chasing the top spot
The Kia Sportage SUV was the best-selling new model in May, while last month’s winner – the popular Ford Puma crossover – finished second in the monthly rankings.
The best-selling new car in 2023, the Ford Puma is establishing itself as the car to beat once again in this year’s registrations race, and despite finishing second in May, still holds a sales lead of over 3,000 models five months into 2024.
A car that sold in fairly inconsistent numbers in 2023, the Audi A3 is establishing itself as a top ten mainstay this year, taking the final podium place in May’s sales leaderboard.
Volkswagen will be content with its May sales numbers, as both its compact Polo and larger Golf family car were in demand. That said, the Volkswagen T-Roc was absent from the May rankings, threatening the crossover’s place in the annual top ten.
The Nissan Qashqai – a former best seller – only finished seventh in May and drops to third in the annual race as a result. Meanwhile the Hyundai Tucson has re-entered the monthly top ten after its recent facelift, but hasn’t recorded enough sales to re-appear in the annual top ten just yet.
Now retired, the long-standing Mini hatch has finally dropped out of the annual top ten for the final time, making way for the Vauxhall Corsa. Mini will be hoping that its new Mini Cooper range will be able to match the sales of its predecessor in the coming months.
Finally, the Tesla Model Y has been missing from the monthly top ten best-sellers for two months now. Named the world’s most popular car just a few months ago, and the best selling car in the UK last December, it seems that the Model Y isn’t selling in the quantities it did last year.
We’ll have our usual detailed look at the top ten in the coming days.
