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Deloitte comments on SMMT new car registration figures

Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said:

“New car registrations grew in November by 24% compared to the same period last year. Against a relatively small base, fleet sales saw a significant uptick in fortunes of 45%, whilst private sales saw more modest growth of 3% as consumers shied away from making major purchases.

The industry looks to fleet sales

“As the rising cost-of-living continues to squeeze consumer pockets, the short term prospects for the automotive sector rely heavily on the performance of fleet sales.

“With many fleet managers currently under pressure to manage a wholesale transition to electric, there will have been relief that the Autumn Statement signalled a continued commitment to encouraging EV adoption through company car schemes.

“Benefit in kind (BIK) rates for EVs will rise from the current rate of 2%, going up 1% per year from April 2025 to 5% by the 2027/28 tax year. Signposting the road ahead for BIK rates should give fleet managers renewed confidence to forge ahead with the transition to electric. However, with supply still struggling to keep up with demand, it might be a while before we see this translate into a significant increase in sales.

One in five vehicles sold now electric

“Demand for electric vehicles continues to remain strong, with volumes up 35% compared to November 2021, and reaching a market share of 21%. These figures reflect a market with greater selection of vehicles and improved battery range, and also mark growing consumer confidence in charging infrastructure - albeit there is still a long way to go. However, with fuel prices also remaining high, this will undoubtedly be a key consideration for those consumers considering a switch.

“Consumers hoping to buy an EV will now also have to weigh up the additional Vehicle Excise Duty (VED) cost imposed in the Autumn Statement. From April 2025, owners of EVs will begin paying VED in the same way as traditional combustion engine vehicles owners do. The impact for cars costing below £40,000 should not be too material, at an extra £165 per year. However, the majority of EVs are currently priced at over the £40,000 price point, which means they will be liable for both £165 VED plus the £355 expensive car supplement – resulting in an additional cost of £520 per annum. A not insignificant sum given the current economic climate.”