New car registrations in the UK rose 1.7% in May, as soaring fleet and business demand continued to offset a fallback in the private consumer market.

Fleets and businesses continued to fuel market growth in May and held a 61.1% market share

A total 147,678 units were registered in the 22nd consecutive month of growth, marking the best May market performance since 2021, according to the Society of Motor Manufacturers and Traders (SMMT) figures. However, performance still remains down on a pre-pandemic level, with a shortfall of some 19.6% on 2019.

Fleets and businesses continued to fuel market growth in May, up 14.0% to 86,870 and 9.5% to 3,355 units respectively, countering a 12.9% decline in private retail uptake. Combined fleet and business sales rose 13.8% to 90,225 units, with a 61.1% market share. In contrast, private retail demand dropped 12.9% and now has only just over a third (38.9%) share of the new car market.

While registrations of both petrol and diesel cars fell, demand for electrified vehicles rose, with the rise in plug-in hybrids (PHEVs), hybrids (HEVs) and battery electric vehicles (BEVs) all outperforming the overall 1.7% new car market rise.

PHEVs recorded the highest growth of all powertrains, up 31.5% to reach an 8.0% market share. BEVs were up 6.2%, taking a 17.6% market share – up from 16.9% in May 2023. HEVs rose 9.6%, maintaining their status as the third most popular fuel type after petrol (54.9%) and the 17.6% share for BEVs.

However, the SMMT has warned that BEV uptake is still driven by the fleet sector, where volumes rose 10.7%. Private retail BEV uptake, meanwhile, fell by 2.0% and was 98 registrations short of May last year.

The industry body is warning that this performance, although encouraging, is still below the trajectory mandated on manufacturers by government under the ZEV mandate, which demands 22% of new vehicles sold this year by each brand must be zero emission.

And while the SMMT says a raft of new EV models and compelling offers are now available, meeting targets will require more support.

Next government urged to support EVs with ‘meaningful purchase incentives’

While a raft of new EV models and compelling offers are now available, the SMMT says meeting ZEV mandate targets will require more support

The SMMT is calling on the next government to provide private consumers with “meaningful purchase incentives”, as it warns that manufacturer discounting cannot be sustained indefinitely.

It also continues to call for universal access to incentives to dramatically increase BEV uptake, such as temporarily halving VAT on new BEV purchases and cutting the VAT levied on public charging from 20% to 5% – in line with domestic use.

Mike Hawes, SMMT chief executive, said: “As Britain prepares for next month’s general election, the new car market continues to hold steady as large fleets sustain growth, offsetting weakened private retail demand. Consumers enjoy a plethora of new electric models and some very attractive offers, but manufacturers can’t sustain this scale of support on their own indefinitely. Their success so far should be a signpost for the next government that a faster and fairer transition requires carrots, not just sticks.”

Meanwhile, David Borland, EY UK & Ireland automotive leader, warned of recent reports that OEMs are considering decelerating their overall sales to increase the likelihood of staying compliant with the ZEV mandate and avoiding significant penalties.

“While this may seem a way of negating short-term risk, this is unlikely to be sustainable for the longer term. It is therefore critical that OEMs, retailers and policymakers work together to find a balance between accelerating the transition towards cleaner and greener transport, without creating a negative impact for the broader industry, including OEMs that manufacture as well as sell in the UK.”

Lex Autolease however said it was heartening to see electric vehicle sales continue to increase.

Nick Williams, managing director at the leasing and mobility solutions giant, said: “That’s feeding through to confidence with those we speak to, which in turn will fuel investment in new models and spur sales further.

“Consistency will be key to maintaining that long-term confidence and helping the market grow. As it does, momentum will pick up and the second-hand market will entice yet more people to make the leap.”

But he added: “With consumer trust and confidence low, which is affecting retail registrations, it’s time to bust the myths surrounding electric vehicles. As an industry, we need to come together to ensure drivers are informed of the cost saving of driving and charging electric vehicles.”

And Deloitte said there needs to be more focus on removing the main barriers preventing the average consumer from contemplating a switch to electric.

Jamie Hamilton, automotive partner and head of electric vehicles, went on: “Currently, electric vehicles don’t appear to make sense for consumers, unless they can charge their cars at home overnight. As a result, there does need to be a push on creating more publicly available charging stations.

“A raft of new low-cost options in the electric vehicle market are expected to land this year which may tempt consumers to make the transition to electric.”

Finally, Kim Royds, mobility director at Centrica, also said that access to charging remains one of the main barriers to mass EV adoption.

“If we’re to make electric vehicles accessible for every driver across the UK, then we must tackle the inequality that exists between at home and public charging.

“Investing more in kerbside infrastructure so those without access to driveways can still benefit from affordable charging rates must be a top priority.”