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UK new car market sees worst year for a generation

Date: 06 January 2021   |   Author: Sean Keywood

UK new car registrations fell by 29.4% in 2020 as the market was hit hard by the Covid-19 pandemic and associated lockdown measures.

Figures from the Society of Motor Manufacturers and Traders show that just 1,631,064 cars were registered during the year. This was the lowest total seen since 1992, and a drop of 680,076 units on the figure from 2019.

It was if anything an even worse year for fleet car registrations, which fell by 31.1%, compared with a 26.6% fall for private registrations.

Business sales, classed as to fleets with fewer than 25 vehicles, were down by 43.3%, taking only 2.1% of the market.

Fleet sales did end the year relatively strongly, with a fall of 8.3% for the month of December, compared with a 13.9% fall for private registrations and a 25.7% drop for business registrations.

In terms of fuel mix, the year saw another major drop in diesel car registrations, which were down by 55% to take just 16% of the overall market, although some of these will have been accounted for by growth in mild hybrid diesel registrations, which were up by 79.6%, albeit still only taking a 3.7% market share.

It was a similar story for petrol car registrations, down by 39% - although maintaining a 55.4% market share - while mild hybrid petrols were up by 184.1% for a 7.3% overall share.

It was a year of strong growth for battery electric vehicles, up by 185.9% to take a 6.6% market share, while plug-in hybrids were also strong, up by 91.2% for a 4.1% share.

Conventional hybrid registrations rose by 12.1%, taking a 6.8% share of the market.

Considering the outlook for 2021, the SMMT warns that the latest lockdown will have a further impact on the industry, with the availability of click and collect sales not enough to fully compensate for showroom closures.

However, it says the vaccination programme offers hope, while the agreement of a Brexit trade deal was also welcome, with the industry now able to plan for the future with more certainty over trading conditions.

SMMT chief executive Mike Hawes said: "2020 will be seen as a 'lost year' for automotive, with the sector under pandemic-enforced shutdown for much of the year and uncertainty over future trading conditions taking their toll. 

"However, with the rollout of vaccines and clarity over our new relationship with the EU, we must make 2021 a year of recovery. 

"With manufacturers bringing record numbers of electrified vehicles to market over the coming months, we will work with government to encourage drivers to make the switch, while promoting investment in our globally-renowned manufacturing base - recharging the market, industry and economy."

Reacting to the figures, Lex Autolease head of consultancy Ashley Barnett said: "Today's 29% year on year drop really hammers home just how challenging the coronavirus pandemic has been for the motor industry.

"The market will take some time to get back on its feet. How long that is remains to be seen. As we set our sights on recovery in the post-Covid global economy, we must remember that accelerating electric vehicle adoption needs to remain at the top of the industry's New Year's resolution list if we're serious about achieving the ambitious Road to Zero targets. 

"The growth in EVs is comforting but ultimately is from an extremely low base - only 6.6% of vehicles on the roads are EVs (including PHEVs)."

Barnett predicted that the chancellor's spring Budget would be crucial.

He said: "The rumoured plans for a road pricing scheme . may go some way to recoup lost tax revenue when EVs begin to overtake conventional ICE models. 

"The chancellor has an opportunity to reassure would-be EV drivers that fiscal incentives will remain on the table and incentivise them to take the first step into alternatively-fuelled vehicles."

Hitachi Capital Vehicle Solutions managing director Jon Lawes said: "2020 was a particularly challenging year, resulting in a near 30 year low for car registrations, and we can expect economic uncertainties to continue into the first quarter of 2021 while the pandemic dampens consumer confidence.

"However, the UK's long negotiated tariff-free trade agreement with the EU should provide a welcome boost for the motor industry to lay the foundations to support a recovery in the sector.

"Similarly, the positive trend in EV uptake demonstrates that the transition to electric will gather momentum in the months ahead heightened by the wide range of new EV models coming to market in 2021 and growing consumer demand."

Giving his verdict on the figures, BVRLA chief executive Gerry Keaney said: "2020 has been a tipping point for electric vehicle uptake and demonstrates what can be achieved when the government works closely with business fleets to develop a set of powerful grants and tax incentives and invest in a robust public charging network. 

"The latest BVRLA data shows that the fleet sector continues to lead the charge towards zero emission motoring, with battery electric vehicles responsible for 21% of company car registrations in the three months to October 2020.

"Unfortunately, if we zoom out and look at the big picture, the car market has had a catastrophic year, with new registrations at their lowest level for nearly thirty years. With so much uncertainty surrounding the impact of EU exit, coronavirus and the economic downturn, the government must do everything it can to support the vehicle buyers that underpin the UK's new car market."

Keaney echoed Barnett's comments about the importance of the upcoming Budget.

"With the next Budget just weeks away, the chancellor must continue to ring-fence the long-term grants and tax incentives that make electric vehicles affordable. 

"He must also resist the urge to pile more motoring tax increases on fleets and drivers that have yet to make the transition to zero emission motoring. Many of these businesses and individuals are struggling financially and can't yet find an electric vehicle that meets their needs or budget."