By Dionne Hanlon, senior editor for LCVs and motorcycles at Cap HPI
The UK's light commercial vehicle (LCV) market has had mixed fortunes over the past year. While internal combustion engine (ICE) vehicle registrations continue to demonstrate resilience, the uptake of battery electric vehicles (BEVs) has struggled to meet expectations.
As we enter 2025, it is worth reflecting on the key trends shaping the sector and considering what lies ahead for LCVs in a market characterised by evolving customer preferences, regulatory pressures, and economic challenges.
In 2024, registrations of ICE vehicles continued to rise across all major LCV sectors, including small, medium, and large vans. This growth reflects the sustained demand for conventionally powered vehicles, driven by their practicality, availability, and familiarity.
Year-on-year increases in registration volumes highlight that, despite the industry’s push toward zero-emission alternatives, ICE vehicles remain the cornerstone of the UK’s LCV fleet.
Between the third and fourth quarters of 2024, ICE registrations showed robust growth, ranging from 16% to 22%, depending on vehicle category.
Medium vans, in particular, continued to lead the charge, offering the versatility and capacity favoured by many businesses.
BEV uptake lags behind ambitions
The BEV sector remains challenging. Despite a concerted industry effort to boost registrations, BEVs accounted for only 5.8% of total LCV registrations in 2024, falling short of the 10% zero emission vehicle (ZEV) mandate.
While small and medium BEV vans showed some growth, other segments, such as large vans, failed to maintain momentum.
The underperformance highlights a critical issue: BEVs are not yet practical or cost-effective for all LCV users.
Challenges such as limited charging infrastructure, high purchase costs, and constrained payload capacities continue to hinder adoption.
Growth in BEV registrations has plateaued, with 2024 figures only marginally exceeding those of 2023.
The used LCV market also faced turbulence in 2024, with values steadily declining over the year. However, as we move into 2025, signs of stability are emerging.
January recorded a minimal decline of just -0.5%, indicating that the market may be finding its footing after a year of significant fluctuations.
Looking back to February 2021, the market is still 11.3% below peak values, with a notable shortfall in vehicle availability contributing to this trend. This deficit, partly driven by reduced registrations in prior years, has left a lasting impact on the LCV parc.
Looking forward
The outlook for 2025 suggests it could be a year of contrasts. Increased vehicle volumes are expected to enter the market by April, which could lead to price reductions.
However, the industry faces the challenge of addressing the ‘hole’ in the parc created by a drop in new vehicle registrations during 2022 and earlier years.
On the retail side, the appetite for LCVs remains stable, with strong demand for low-mileage vehicles in good condition.
Ready-to-retail vans, particularly those three to five years old, continue to command above-average prices, reflecting their appeal to businesses and private buyers.
New buyers have entered the market encouragingly, taking advantage of opportunities left open by traditional big buyers during quieter periods. The diversification of the buyer base could help support market activity as 2025 progresses.
For the LCV sector to thrive, addressing the barriers to BEV adoption is critical. Expanding charging infrastructure, offering financial incentives, and improving the affordability of electric models are necessary steps to accelerate the transition to zero-emission transport.
Supply chain stability will also be vital in maintaining balance in the new and used markets. With businesses increasingly seeking reliable, efficient vehicles to support their operations, the industry must ensure a steady flow of high-quality options across all categories.
As we move into 2025, the focus must be on overcoming these challenges, fostering innovation, and ensuring that the market remains adaptable to shifting demands.
The year ahead offers opportunities for growth and transformation, but success will require a concerted effort from manufacturers, policymakers, and businesses alike.
By addressing key barriers and building on the stabilisation seen in early 2025, the LCV market can lay the groundwork for the future.
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