UK records best year for new car sales since the pandemic – SMMT

(Reuters) -Britain’s new car market witnessed its best year since the COVID-19 pandemic as easing supply chain issues helped fulfil pent-up demand for fleet vehicles, an industry body said on Friday.

Final data from the Society of Motor Manufacturers and Traders (SMMT) showed that 1.9 million vehicles were sold in 2023, an increase of 17.9% from a year ago and the highest level since the 2.3 million registrations in 2019.

Meanwhile, year-on-year December new car sales grew 9.8%.

The new car market recovery was fuelled by fleet owners increasing investments after supply chain issues and a chip shortage slowed production during the pandemic.

Registrations for fleet deliveries grew to over 1 million of all cars sold in 2023, a 38.7% increase on the previous year.

Last year also saw more battery electric vehicle (BEV) sales than the previous two years combined, with 314,687 new cars registered – 50,000 more than in 2022.

Still, BEVs comprised just 16.5% of total registrations, marginally lower than 16.6% a year earlier.

The lacklustre growth in the electric vehicle market comes amid flailing private demand, with the cost of living pressures and high interest rates weighing on consumer spending.

Private registrations dropped 14% year-on-year in December and by 0.1% for 2023.

SMMT has called on the government to halve the value added tax (VAT) on new BEVs for three years.

The industry body estimates that a tax cut would give consumers an additional 7.7 billion pounds in BEV buying power by 2026-end.

It is also seeking a cut in the VAT on public charging to drive up adoption.

The UK government has announced plans to phase out petrol, diesel and hybrid vehicles by 2035. Under its so-called zero-emission vehicles (ZEV) mandate, 22% of carmakers’ sales this year must be electric, rising in increments to 80% electric in 2030 – and eventually reaching 100% in 2035.

“Government has challenged the UK automotive sector with the world’s boldest transition timeline and is investing to ensure we are a major maker of electric vehicles”, SMMT Chief Executive Mike Hawes said.

“It must now help all drivers buy into this future, with consumer incentives to make the UK the leading European market for ZEVs.”

($1 = 0.7878 pounds)

(Reporting by Radhika Anilkumar and Eva Mathews in Bengaluru; Editing by Tasim Zahid)