Car makers sold more than one million cars in the UK in the first half of this year for the first time since before the coronavirus pandemic, as the car industry gradually recovers from years of turmoil.
The car industry is expected to sell around 2 million cars this year, the first time since 2019, according to preliminary data from the British Motor Manufacturers and Manufacturers Association, the UK car industry lobby group.
SMMT chief executive Mike Hawes said sales of two million units this year were “slightly below par”, but that the recovery would come as a relief to the industry after years of struggle.
But the increase was “almost entirely due to business and fleet sales” and not private buyers, he told BBC Radio 4’s Today programme. “Most people are buying on some form of finance and with inflation and interest rates high, it’s becoming more expensive to buy.”
Annual auto sales hit a record high of 2.69 million in 2016. They declined for the next three years but remained well above 2 million. Sales plummeted in 2020 as the pandemic forced factories to shut down and people stayed home from showrooms for months, leaving supply chains disrupted for years.
Sales are expected to recover to 1.9 million units in 2023, but excluding the impact of the pandemic, that would be the lowest level since before the 2008 global financial crisis.
The rise of electric vehicles is also a complicating factor for the industry, which now must sell more zero-emission cars or face heavy fines. But European manufacturers complain they are struggling to find buyers for electric vehicles, which are priced higher than gasoline and diesel cars to cover the cost of batteries. Stellantis, the parent company of Vauxhall, Peugeot and Fiat, threatened last week to close a British factory because of so-called zero-emission vehicle (ZEV) regulations.
The SMMT predicts that the market share of pure battery electric vehicles in new cars in the first half of 2024 will remain around 16-17% – roughly the same as last year.
Hawes said demand for electric vehicles has “kind of plateaued.”
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“When these vehicles first came on the market, the demand was very high because they were early adopters,” he added. “We need to move it from the early adopter stage to the mass market, and it’s not going to be smooth.”
Car makers sold 827,000 vehicles in the first five months of the year, a 7% increase on 2023. Final figures for June will be published by the SMMT at 9am on Thursday.
