UK Car Sales Decline as Electric Vehicles See Uptick

Car registrations in the United Kingdom decreased for the fifth consecutive month in February, with a 1 per cent overall decline compared to the same period last year. Data released by the Society of Motor Manufacturers and Traders (SMMT) indicates a drop to 84,054 new registrations, despite rising demand for electric vehicles and stronger private and business buyer activity.

Fleet registrations, which have historically driven market growth, fell by 4 per cent. This decline reflects February’s position as one of the quietest months for fleet uptake, preceding the more significant March update to number plates. Despite the subdued overall market performance, battery electric vehicles showed remarkable growth, with sales rising by 41.7 per cent year-on-year to 21,244 units. Electric cars accounted for one in four vehicles sold during February.

The increase in electric vehicle sales is attributed to anticipated tax changes coming into effect in April. Under the new rules, certain electric vehicles will face the vehicle excise duty “expensive car supplement” for the first time. This measure could add up to £2,125 over a six-year period for battery electric vehicles with list prices above £40,000. The higher production costs of these vehicles mean they are disproportionately affected, with the average electric vehicle often surpassing this threshold.

Mike Hawes, chief executive of the SMMT, highlighted the financial strain manufacturers face as they work to meet government targets and European Union emissions regulations while contending with intensifying competition from Chinese rivals. He emphasised that long-term progress in the electric vehicle market requires incentives rather than penalties.

The SMMT remains optimistic that March will show a significant surge in electric vehicle sales, as buyers seek to take advantage of the new number plates and avoid additional tax burdens. However, concerns linger over the impact of these tax measures on both new and used electric vehicle market growth, potentially slowing the transition to greener transport options.

In February, Tesla reported a 20.7 per cent increase in UK sales compared to the same month last year, demonstrating strong performance despite weaker results in other European markets. Elsewhere, Tesla faced significant declines, with sales dropping by over 40 per cent in countries like Sweden, Norway, and France, alongside intense competition from China-made electric vehicles.