UK car market struggling, but full electric continues to grow

The UK saw plug-in electric vehicles take 20.2% of the car market in August, down from 18.3% year-on-year. Full electrics saw decent share growth while plug-in hybrids lost share, weighing on the combined plug-in result. Overall auto volumes were 68,858 units, a slight year-on-year improvement, but still down 18.8% from pre-2020 seasonal norms. BMW brand took highest share of all-electric sales during the month.

The combined August plug-in result of 20.2% included 14.5% fully electric vehicles (BEVs) and 5.6% plug-in hybrids (PHEVs). This compares to respective shares of 10.9% and 7.4% a year ago.

In terms of unit volumes, BEV sales increased over 35% year-on-year to 10,006 units. PHEVs, on the other hand, lost 23.1% volume year-on-year, to just 3,884 units. Similar weighting trends between the two classes of plugins occur in other European markets.

Diesel-only vehicles lost just over 10% in year-over-year sales volume, while gasoline-only powertrains grew by around 7% in volume. No plug hybrids, including mild hybrids, lost just over 10% volume year-over-year.

Best Selling BEV Brands in the UK

As usual, we have data on New Automotive’s BEV brand share based on UK Vehicle Registration Agency (DVLA) records. Although the data excludes vehicle registrations with personalized license plates, the proportions should fairly represent the BEV brand’s overall share of new sales.

In August, we note that BEVs of the BMW brand took first place in terms of new registrations, with 11.4%, ahead of the Tesla and Volkswagen brands.

BMW’s rise to the top stems in part from a slight growth in delivery volumes compared to its average in recent months, but more so from the underperformance of its rivals, Volkswagen and Tesla, (and others ) compared to their recent volumes. .

Obviously, a single month doesn’t necessarily tell us much, so let’s take a step back and look at the results for the last 3 months for all brands:

Compared to the result from 3 months ago, Tesla is still leading the recent rankings, thanks to its strong June delivery push, far ahead of a bunch of towing brands, Hyundai, Kia and Volkswagen.

Hyundai’s 2nd place represents a strong improvement from 5th place during the March-May period. Here is a summary of the significant climbers compared to the brand ranking of 3 months ago:

Others have lost their position compared to three months ago:

Most of the other top 20 brands only moved up one or two places, if at all.

Finally, let’s back up a bit and look at the relative performance of the different automotive manufacturing groupsin terms of BEV market share in the UK.

Compared to the result 3 months prior, Tesla fell two places from 1st to 3rd, allowing previous finalists, Volkswagen Group and Hyundai Motor Group, to each move up a place to 1st and 2nd, respectively. The Volkswagen group now has a decisive lead, far ahead of the Hyundai Motor group.

The 4th and 5th places remained the same, still occupied by Stellantis and BMW Group, but with Stellantis far ahead. Outside the top 5, Renault-Nissan fell from 8th to 6th place, swapping places with Mercedes Group. SAIC, owner of the MG brand, remained in 7th place.

Outlook

The car market in the UK and across Europe reflects the global economy, and things are not going very well at the moment. The latest inflation data (July) puts the UK at an annual rate of 10.1%, compared to 2% year-on-year, which is highest rate in 41 years.

Much of this is due to energy price inflation (and supply shortages), with gas trading between 240 and 640 pence sterling per therm over the past two months, down from 100 to 110 pence , year-on-year. Similarly, electricity has been in the range of £260-£560/MWh over the past two months, down from a flat £40 year-on-year.

As I mentioned in my report on France, in many parts of Europe, in times of crisis, there is a historical precedent for the government subsidize energy prices for households, to avoid poverty and social unrest. However, if energy supply is inherently limited, allowing households to consume close to their usual volumes obviously means that someone else has to cut short and/or pay even higher prices – and in the UK, they are the commercial users of energy.

A well-known current example is that UK pubs are seeing their energy bills rise by at least 300% to 400% above normal levels (and over 500% in some cases). For this reason, 70% of UK pubs currently do not expect to be able to remain economically viable over the coming winter.

Obviously, local pubs are a relevant example of a small business, but the same energy prices also affect all other commercial users and put small and medium-sized businesses under immense financial pressure. Because ‘borrowing from Peter to pay Paul’ isn’t much of a solution, the UK government is now talking about trying to protect both households and businessesand implement a general freeze on energy bills.

Since energy prices, however, fundamentally reflect limited supply (rather than above-normal demand), price caps and subsidies alone will not necessarily solve the underlying energy shortage problems. energy.

Due to energy inflation, general inflation and other economic headwinds, forecasters now see recession looming in the UK, which will inevitably dampen consumer spending and further dampen sales of new automobiles.

Even with capped electricity prices, the economic advantage of electric driving over combustion fuel is no longer as great as it used to be, but if cheap overnight rates can still be found ( UK consumers are asked to comment below), the long-term economics are still in favor of plugins. At least, the economic calculation for those who can still afford a new car.

So that should mean the plugins still see decent relative demand in the coming months — that is, the share of new sales — even if the overall volume of auto sales slows considerably. We will have to wait and see.

The UK automotive industry association, the SMMT, recently said: “Soaring energy costs and inflation, in addition to continued supply chain challenges, are exerting even more pressure on the auto industry’s post-pandemic recovery, and we urgently need the new Prime Minister to address these challenges and restore confidence and sustainable growth.

What do you think of the UK consumer economy and the outlook for the automotive market in the months ahead? Will plugins continue to steadily increase their share? Please jump into the comments section below to share your views.

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