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Record new car registrations driven by fleet sales

UK new car registrations hit an all-time high in 2016, with fleets responsible for much of the growth.

Row of new cars

The SMMT said fleets were responsible for most of the new car market growth last year, with registrations up to a record 1.38m units.

Latest figures from the Society of Motor Manufacturers and Traders (SMMT) show that the new car market saw a record 2,692,786 registrations in 2016, up 2.3% and marking the fifth year of growth. December marked the second only month of negative growth in 2016, as registrations dipped -1.1% to 178,022 units.

The fleet market was credited with helping to drive the growth, with a wide choice of new car models and affordable finance deals also helping to spur registrations on.

Fleets were responsible for most of the growth, with demand growing to a record 1.38 million units for the year – up 4.8% and giving the sector a 51.3% market share compared to 50.0% for the whole of 2015.

According to both the BVRLA and Lex Autolease, a significant year-on-year rise in personal contract hire (PCH) was a key factor in the overall growth.

The sub-25 ‘Business’ market saw a decline of 1.2% for the year, bringing it to 105,786 units, despite a 50.9% increase in December registrations to 8,257 units.

The private market remained near last year’s record level, with a 0.2% decline to 1,206,250 units, although demand fell over the latter three-quarters, with December recording a 5.5% drop to 67,640 units.

Diesel and petrol cars continued to be by far the most popular fuel types for consumers with market share at 47.7% and 49.0% respectively. However, alternatively fuelled vehicles (AFVs) experienced a strong uplift in demand, up 22.2% across the year. Plug-in hybrids and petrol electric hybrids, in particular, experienced significant growth, with demand up 41.9% and 25.1% respectively. Meanwhile, more than 10,000 motorists chose to go fully electric in 2016 – up 3.3% on 2015.

Lauren Pamma, head of fleet consultancy at Lex Autolease, commented: “The SMMT’s figures on the growth in alternative fuel vehicle registrations reflect what we’re seeing. Ultra-low emission vehicles (ULEVs) still make up a tiny percentage of cars on the road, but as businesses seek to reduce their carbon footprints, and with the Government set to protect these vehicles from recent changes to benefit in kind tax and encourage investment in new charging infrastructure, ULEVs should continue to take fleet market share from traditional fuel vehicles over the next 12 months.”

Mike Hawes, SMMT chief executive, added: “2017 may well be more challenging as sterling depreciation raises the price of imported goods but, with interest rates still at historic lows and a range of new models arriving in 2017, there are still many reasons for consumers to consider a new car in 2017. Looking longer term, the strength of this market will rest on our ability to maintain our current trading relations and, in particular, avoid tariff barriers which could add significantly to the cost of a new car.”

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 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.