Smart Transport

New car registrations slump almost 40% in January but electric demand rises

Queue of cars

The UK new car market fell 39.5% in January with 59,030 fewer registrations compared to the same month last year, according to figures published by the Society of Motor Manufacturers and Traders (SMMT). 

However, continued growth in battery electric (BEV) and plug-in hybrid (PHEV) cars is seeing CO2 emissions drop. Last year, they recorded the largest ever fall, with average vehicle CO2 emissions at 112.8g/km, a reduction of 11.8% compared to 2019 and 37.7% compared to 2000. 

Just 90,249 cars were registered in January as showrooms across the country remained shut, leading to the worst start to the year since 1970. Demand remained depressed for both private buyers (down 38.5%) and large fleets (down 39.7%). Declines were also recorded in both petrol and diesel cars registrations, which fell by 62.1% and 50.6% respectively.

However, BEV uptake grew by 2,206 units (54.4%) to take 6.9% of the market, as the number of available models almost doubled from 22 in January 2019 to 40 this year. Combined, BEVs and PHEVs accounted for 13.7% of registrations.

With lockdown restrictions in place until March – the most important month of the year for the sector, accounting for one in five new car registrations on average – the industry will face a challenging year as showroom closures depress consumer demand, which has a knock-on effect on manufacturing output. The SMMT has called on the Government to allow the reopening of dealerships as soon as it is safe to do so to help re-energise consumer confidence, supporting jobs and a green recovery.

With the industry targeted to achieve a UK-only CO2 fleet average target of 95g/km this year, or face severe penalties, the SMMT believes this underscores the need to get showrooms open as soon as Britain emerges from lockdown, so they can generate the demand required to reach the country’s green goals.

The effect of the current lockdown can be seen in SMMT’s latest market outlook. Having expected more than two million new cars to be registered in 2021, this forecast has now been downgraded to below 1.9 million given the more severe negative impact on first quarter performance and March in particular. The forecast does represent an increase of 15.7% compared to 2020, but it would still be a very subdued market in historical terms, given the 10-year average new car market to 2019 was 2.3 million.

More positively, BEVs and PHEVs are estimated to grow their combined market share from just over one in 10 new cars, to more than one in seven. Such growth in ultra low emission vehicles would continue the trend seen in 2020. Last year, BEV, PHEV and hybrid electric vehicles (HEVs) accounted for almost one in six new car registrations. In fact, more than half of all BEVs registered in the past two decades were registered in 2020 alone.

Mike Hawes, SMMT chief executive, said, “Following a £20.4 billion loss of revenue last year, the auto industry faces a difficult start to 2021. The necessary lockdown will challenge society, the economy and our industry’s ability to move quickly towards our ambitious environmental goals. Lifting the shutters will secure jobs, stimulate the essential demand that supports our manufacturing, and will enable us to forge ahead on the Road to Zero. Every day that showrooms can safely open will matter, especially with the critical month of March looming.” 

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