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Fleet market remains more buoyant than private registrations

The fleet sector continues to outperform private new car registrations despite still showing a downturn.

Cars in storage

The UK new car market declined for the fourth consecutive month in June, down 4.9%

Latest new car registration figures from the Society of Motor Manufacturers and Traders (SMMT) show that fleet registrations fell 2.5% last month to 136,836 units; nearly half the 4.8% fall seen for private registrations and compared to a 37.1% decline in the sub-25 ‘Business’ sector. It means that fleet registrations accounted for 56.8% of new car registrations last month, compared to 55.3% in June 2018. Overall registrations stood at 223,421 – down 4.9% compared to the 234,945 recorded in June 2018 and marking the fourth month of decline.

It was a similar, albeit slightly more positive picture for year-to-date registrations, with fleet down 1.0% to 671,400 units for the first six months of the year while private registrations were down 3.2% and business down 39.3%. YtD, fleet accounted for 52.9% of registrations compared to 51.6% for the same period in 2018. Overall registrations were down 3.4% to 1,269,245 units – said to be in line with market expectations.

The SMMT figures also show a downturn in registrations of alternatively fuelled cars, with combined battery electric vehicle, hybrid electric vehicle and plug-in hybrid car registrations down 11.8% from 15,099 units in June 2018 to 13,314 last month – the first fall for the sector since April 2017. The fall, however, is largely due to a significant 50.4% in PHEV registrations compared to June 2018 – which was before the Plug-in Car Grant was axed for PHEVs. Hybrids meanwhile were also down, albeit with a smaller 4.7% decline. In contrast, battery electric vehicle registrations were actually up 61.7% to 2,461 units, showing continued demand for such powertrains.

Petrol registrations in June were also up – by 3.0% – but the increase was not enough to offset the continuing decline of diesel, which fell for the 27th month in a row with a 20.5% downturn.

Mike Hawes, SMMT chief executive, said the decline in sales of alternatively fuelled cars was “a grave concern”.

He added: “If we are to see widespread uptake of these vehicles, which are an essential part of a smooth transition to zero-emission transport, we need world-class, long-term incentives and substantial investment in infrastructure. Fleet renewal remains the quickest way to address environmental concerns today and consumers should have the confidence – and support – to choose the new car that best meets their driving needs, whatever the technology, secure in the knowledge that it is safer and cleaner than ever before.”

Jon Lawes, managing director, Hitachi Capital Vehicle Solutions, also commented on the figures: “It’s concerning that AFVs demand has fallen in June as this had represented a real bright spot in 2019 amid the UK car market’s overall decline.

“With our recent research finding that 78% of people believe vehicle emissions are a significant problem in the UK, the appetite is there but, as the SMMT rightly highlights, further measures and incentives are needed to encourage consumers to switch to AFVs.

“With registrations for battery electric vehicles, which still qualify for subsidies, rising this month, it’s clear that the decision to exclude many plug in models from qualifying for the grant is having an impact. With the recent arrival of more plug-in models, reviewing policies and purchase incentives for all AFVs must be government priorities for the health of the UK car market.”

Meanwhile Matthew Walters, head of consultancy and customer data services at LeasePlan UK, said the decline in hybrid registrations was the result of the switch to WLTP, which has seen the new Prius no longer exempt from the London Congestion Charge.

He added: “Looking ahead to the draft Finance Bill, which is expected next week, we hope that the Government will mitigate the impact of these new emissions figures on company car tax. At a time of uncertainty, drivers deserve some answers and need to see the tax incentives for going green.

“It’s also important to note that at LeasePlan UK, we’re seeing demand for EVs currently outweigh supply by about 4:1. Granted, in the last few years, manufacturers have produced more electric vehicle models – but there still aren’t enough to fully meet the demand. We must have commitments from manufacturers on guaranteed volumes for the UK market – particularly as there’s now the added uncertainty around how those manufacturers will balance their EU emission targets against their UK supply, post-Brexit.

“Going forward, the government must incentivise manufacturers to supply the UK with enough vehicles to meet demand if we’re to meet the recent 2050 zero emission target set out by the Theresa May.”

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.