New car retail market recovers as SMMT calls for VAT cut on public EV charging

The new car retail registrations increased by 14.8% in June, but fleets are continuing to lead the market, according to the latest data by Society of Motor Manufacturers and Traders (SMMT).

Fleet registrations increased by 37.9% and the overall market was up 25.8% in June to 177,266 units.

Deliveries of petrol cars increased 22.7%, to remain the most popular powertrain, while those of hybrids (HEVs) and plug-in hybrids (PHEVs) also rose, by 40.1% and 65.5% respectively. Diesel registrations were down -13.5%.

Battery electric vehicle (BEV) registrations, meanwhile, grew again, with the segment up 39.4% as 31,700 buyers chose to get behind the wheel of a zero emission car – 17.9% of the total market.

It is business and fleets, however, rather than private buyers, that continue to drive this growth, thanks to the attractive fiscal incentives on offer.

Although manufacturers are offering a range of BEV deals for private buyers, including flexible subscription models and attractive finance rates, the SMMT believes more could be done by other stakeholders to make purchasing even more compelling.

VAT equity on public charging

Given that recharging an EV at home can offer a 60-70% cost per mile saving compared with refuelling a petrol or diesel vehicle, the industry is calling for a cut in VAT on public charging to help quicken uptake.

Drivers able to charge at home pay 5% VAT to power up their EV, compared with 20% for those without access to a driveway or designated private parking space who are reliant on the public network.

The SMMT said VAT equity would make switching to an EV feasible for more people regardless of home ownership or property status.

Mike Hawes, SMMT chief executive, said: “Most EV owners enjoy the convenience and cost saving of charging at home but those that do not have a driveway or designated parking space must pay four times as much in tax for the same amount of energy.

“This is unfair and risks delaying greater uptake, so cutting VAT on public EV charging will help make owning an EV fairer and attractive to even more people.”

Sue Robinson, National Franchised Dealers Association (NFDA) chief executive, said the first half of the year has been strong, with registrations up 16% compared to the first six months of 2022.

However, Robinson said supply side constraints are still prevalent for certain manufacturers, but on the whole, retailers are noticing consistent improvement for showroom stock and wait times are gradually reducing.

She said: “Ongoing economic turbulence, including rising interest rates and inflation is impacting consumer spending power.

“Price parity between EV and ICE is still far too wide which has the potential to become a problem on the road to 2030.

“It is imperative Government does not lose focus on its climate commitments and introduces more financial incentives for the general public to support affordability of EVs and enabling an efficient and fully functional charging infrastructure.”

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