David Borland, EY UK & Ireland Automotive Leader, comments on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures for May 2023
“The UK car industry continued its upward trend in May 2023 with just over 145,000 new registrations, a 16.7% year-on-year increase, marking ten consecutive months of growth. Despite the majority of growth being in the fleet market, this sustained recovery has provided a much-needed boost to the sector, instilling renewed hope and confidence for the future in a sector that contributes £14bn in value added to the UK economy annually and almost 800,000 jobs across the wider value chain.
“The increase of over 17% recorded in Heavy Goods Vehicle (HGV) sales during Q1 2023, plus a 9% production increase this year to date for Commercial Vehicles, serve as compelling evidence on two fronts. Firstly, the demand observed from logistics and freight companies is a positive indicator of economic revival, highlighting a resumption of growth. It also showcases the industry's capacity to overcome challenges and underlines its progress in returning to a state of stability and recovery after the adversities encountered in recent years.
“However, despite the notable recent growth in the HGV market, and the SMMT revealing that there are now 20 Zero Emission Vehicles available in the UK, electric and hydrogen HGVs represented just 0.3% of the market in Q1 2023. Similar to passenger cars, the lack of HGV-dedicated public charging or hydrogen refuelling stations are cited as a key reason for the lack of uptake. The infrastructure requirements are significantly different for HGVs versus passenger cars, but it does highlight the dependency of infrastructure to the success of the UK’s wider decarbonisation transition.”
Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, said
“In May, Battery Electric Vehicle (BEV) sales increased almost 60% compared to 2022, but despite being the second most popular powertrain technology, the market share remains relatively in line with 2022 at 15.7% this year to date.
“The much talked about challenge on infrastructure availability was highlighted in a recent report that revealed a growing gap between the number of electric cars on UK roads and the number of available public chargers. Last year, there were 36 electric cars for every public charger, compared to 31 at the close of 2021. This disparity necessitates action, with a focus needed on the type of charger and location rather than just an increasing quantity.”
David Borland added
“Regulation continues to be a dominant factor in the future of the automotive industry in the UK. If the Zero Emission Vehicle (ZEV) mandate comes into effect as proposed in 2024, it will create significant challenges for manufacturers to comply with while presenting the possibility of financial penalties. Changes to the Rules of Origin in the Brexit trade & cooperation agreement are also planned to come into effect in 2024, which stipulate that 45 percent of an Electric Vehicle's value must be sourced in the U.K. or elsewhere in Europe from 2024 to avoid export tariffs.
“With many countries around the world supporting their transition with investment, it is important to get the balance of public and private funding in harmony with policy and penalties to create market readiness and drive consumer adoption.”