The schism in new car sales continued in February, with fleet and business registrations powering along while private sales fell again – with no real signs of recovery on the horizon.
According to data published yesterday by the Society of Motor Manufacturers and Traders (SMMT), the overall market was up 14% on last February’s numbers. However, that was the result of a 25% increase in fleet registrations, while private sales fell by 3%.
Private sales made up only a third of all new cars registered in February, whereas historically we’d expect to see them making up closer to half (about 45%). While fleets are buying cars at better than pre-pandemic levels, private car sales are about 25% down on what they were before Covid-19.
We’re only going to do a quick round-up of the numbers here, as we’re shifting to a quarterly analysis cycle in 2024. There’s simply too much variation month-by-month to properly analyse market trends, so our new plan is to do short summaries for the first two months of each quarter and then a more in-depth analysis every three months.
It’s also worth noting that January and February data historically show lower personal car finance borrowings than the annual average, which skews sales results in favour of cheaper cars for private car buyers. Inevitably, that works against EVs, which are more expensive to buy than petrol cars.
Fleets continue to embrace EVs, private customers less so
While the overall market was up by 14%, EV sales were up by 22% – the second month in a row that they’ve outpaced the market after slowing down at the end of last year.
Part of that 2023 slowdown was that several car companies were holding back on delivering new EVs. With the government’s new Zero Emission Vehicle mandate coming into effect in January, car companies must hit a minimum of 22% of EVs in their new car sales or face a fine of £15,000 per car outside that target. So at least part of the growth this year has been the market ‘catching up’ those deferred deliveries.
The SMMT has pointed out that fewer private customers are buying EVs, which is true – although fewer private customers are buying new cars of any kind. There’s also the probability that a large proportion of private EV sales are actually contained in the fleet data, as a large number of EV customers (up to half, according to some industry figures speaking to The Car Expert off the record) source their cars through salary sacrifice, whereby the leasing company buys the car – unlike traditional car finance where the customer buys the car.
What’s almost certainly true is that the higher up-front and financing cost of an EV (for those who can’t get one as a salary sacrifice) is hurting new EV sales. Until prices come down, that’s going to continue.
Oh, and diesel’s market share hit yet another all-time low, dropping below 6%.
Good month, bad month
Rather than our usual list of every car company, we’ll just summarise the biggest winners and losers in February. The overall market was up 14%, but with significant variations in performance from all the car companies. That’s fairly normal for February, so CEOs will refrain from either popping champagne corks or slitting their wrists based on this month’s numbers alone.
Of the volume manufacturers, MG was the biggest winner, tripling its sales over last February. BMW also had a very strong month, up 66%, while Honda was the third biggest improver, up 57% on the same month last year.
In the other direction, quite a few large manufacturers sold far fewer cars this February than they did last year. Ford slipped the furthest in absolute numbers, although Dacia and Toyota were worse in percentage terms. Year-to-date, Toyota is well off the pace, with sales down 25% against an overall market that has grown by 10%.
We’ll be watching the brand numbers with interest, as the Zero Emission Vehicle Mandate is likely to play havoc for some brands that have few electric cars to sell (which may explain Toyota’s slow start to the year).
Volkswagen was the UK’s best-selling brand in February, as usual, ahead of BMW, Ford, Audi and Vauxhall.
Puma back on top of the charts
The Ford Puma was the UK’s best-selling car in February, with a strong result that also pushed it top the top in tear-to-date sales over the Kia Sportage (last month’s best-seller). However, given small overall sales to date, it’s all a bit irrelevant for now. March is usually the biggest month of the year so it will set the tone for the rest of 2024.
January and February often throw up unusual sales results, as car manufacturers and dealers either hold back for March or try to clear the decks of existing stocks. Best not to read too much into it all, so we’ll explore the overall first quarter results next month.
