Carmakers turn to discounts and pre-reg in bid to hit ZEV targets (video)

Pre-registering is on the rise as manufacturers seek to boost volumes of electric cars to reach their ZEV Mandate targets for 2024.

Fleet continues to fuel the rise in new car registrations, with a 24% increase in unit sales, compared to an 11% reversal in private sales.

Overall, the market is up 7% in the first half of the year.

“Whilst the market is growing, part of this is short cycle business and pre reg,” said director of automotive finance Rachael Jones (pictured) on the Q2 Fleet News Market Insight with Auto Trader broadcast.

She added: “There's been a 55% growth in vehicles listed on Auto Trader that are under one year old and under 100 miles on the clock, versus June last year. That's still a lot less pre reg than 2019 - it's 44% back versus 2019 - but you can see that short cycle business is coming back.”

Electric car registrations continue to rise in volume, underpinned by demand from company cars drivers, but market share has stalled at around 16%, noticeably below the 22% ZEV Mandate target.

“The retail market is really struggling, and we see that on our platform,” said Jones.

“EVs account for less than one in 10 new cars sold to private retail customers.

Pointing the finger at EV prices

Interest in electric cars peaked in June 22 when around 36% of consumers viewing cars on the Auto Trader website were looking at electric models.

That coincided with record petrol prices.

Since then, prices have dropped and demand for EVs is now hovering at around 15% of new car advert views.

Jones points the finger at prices, with two main challenges for consumers to overcome.

“One is that the average price of a new car has increased by nearly 30% in the last four years.

And so, if you're coming into market for your next new car, you've got to size up the average price, which has increased massively,” she said.

“But then secondly, brand new EVs are, on average, about a third more expensive than the petrol or diesel equivalent. So, you've got those two things to contend with if you've just come back into market.”

However, recent Auto Trader research revealed that more than a third of buyers are considering purchasing electric for the next car.

With most people changing cars every three or four years, this could result in a surge in electric registrations before 2030.

The impact of used cars

The used car market faces a different situation.

Prices have fallen dramatically over the past 12-18 months, which has been tough for leasing companies, manufacturers and fleets to swallow, but it has made electric cars more affordable for people.

“There's more supply, there's greater choice, it's more affordable. And so, we are seeing some positive movements in that used car market,” Jones said.

“Of all under five-year-old cars listed on Auto Trader, around 8% of all the leads that are sent to retailers are on used EVs.”

However, challenges remain in certain pockets of the used car market.

EVs under one-year-old, in particular, are under intense price pressure and speed of sale; they are taking much longer to sell compared to a three-to-five-year-old EV because OEMs are incentivizing new with finance offers and discounting.

Buyers are either purchasing new or going for older used cars.

Average discounts for new EVs are around 10.8% versus 8.8% for petrol, which is in addition to finance offers and deposit contributions.

The need for a proactive Government

Auto Trader believes there are four priorities for the new Government to stimulate demand in the new and used markets for electric cars.

Maintain the existing salary sacrifice and BIK incentives to support the new electric market

Develop targeted financial incentives on used cars to support greater adoption

Policy certainty and a government that is proactive and transparent about any future changes in, for example, road pricing, so that consumers and businesses can plan accordingly

Support the industry to increase the speed of installing chargers by removing planning issues and encouraging more creative ways to enable consumers to charge EVs near their homes.

Watch the full 30-minute discussion between Fleet News editor Stephen Briers and Auto Trader director of automotive finance Rachael Jones to find out how sponsorship of the Euros has boosted BYD’s profile, the performance of BEV residual values versus ICE, why dealers are lacking confidence in electric models and how the market is likely to evolve over the second half of 2024.

Video

See also the video of Jones and Ian Plummer, Auto Trader commercial director talking about how the automotive centre of gravity has shifted to China, and how 'legacy brands' need to speed up model development to keep pace.