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 22% increase in unit sales, compared to a 12% reversal in private sales. Overall, the market is up 6% in the first half of the year.
“Whilst the market is growing, part of this is short cycle business and pre reg,” said Auto Trader UK director of automotive finance Rachael Jones on the Q2 broadcast of the Fleet News Market Insight with Auto Trader.
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.”
Interest in electric cars peaked two years ago 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 resolve.
“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.”
Nevertheless, recent Auto Trader research revealed that more than a third of buyers are considering purchasing electric for their next car.
With most people changing cars every three or four years, this could result in a surge in electric registrations before 2030.
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 absorb, 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 less than one-year-old are under particularly intense price pressure and issues over speed of sale. They are taking much longer to sell compared to a three-to-five-year-old EV because OEMs are heavily incentivizing new EVs with finance offers and discounting. Consequently, 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.
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 EURO2024 Championships 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.
More articles on:
Bauer B2B group editor Stephen Briers has been an automotive business journalist since 1995. He has been editor of Fleet News since 2009 and before that was editor of Automotive Management for almost seven years. He now oversees both brands, as well as RAIL magazine.
Login to comment
Comments
No comments have been made yet.