UK car sales have grown all year, despite borrowing becoming more expensive and a cost of living crisis creating difficult financial conditions for consumers.
The number of new cars registered grew 28% in July, compared to a year earlier, in the seventh month of growth this year, according to data from the Society of Motor Manufacturers and Traders (SMMT).
But despite the increase last month, new registrations are still below historical trends and the outlook for next year has been downgraded.
The July 2023 growth was sizeable because of the extent of contraction last year – new registrations in July 2022 were at the lowest level across the 16 years from 2006.
Latest SMMT data showed more orders were able to be fulfilled and production increased as supply chain woes that plagued the pandemic years have unwound, the SMMT said.
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It led to 143,921 new vehicles being registered, the highest number since July 2020 when pent up demand from the first few months of lockdown was unleashed.
Economic research firm, Pantheon Macro, noted the figure was below the 168,000 average July sales from 2015 to 2019.
New car sales to individuals “remain in the doldrums”, Pantheon’s senior UK economist said.
Company registrations, rather than individual purchases, drove the July growth.
Uptake by large fleets increased 62% to 80,961 units and business registrations rose 28.7% to 2,915 new vehicles.
Tough economic conditions, such as the rate of inflation and high interest rates, have led to a 0.7% downgrade in the number of expected vehicle registrations for 2024.
For the remainder of the year, however, Pantheon said car sales will recover “only gradually”, and will be around 10% to 15% below pre-COVID norms.
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Are electric cars really worth it?
At the same time, the proportion of electric car sales grew. The SMMT said one battery electric car was registered every 60 seconds as deliveries rose 87.9% and electrified vehicles accounted for more than a third (35.4%) of the market.
Electric growth needs to accelerate, the SMMT said, if environmental targets are to be met.
Government had set a target of 2030 by which new petrol and diesel cars will be banned from sale.
“While the growth in electric vehicles hitting UK roads is significant, it must move even faster if it is to outpace the rest of the market and enable the UK to meet ambitious but necessary environmental targets,” the SMMT said.
It did note that a record high of 3,056 new public chargers were installed for electric vehicles.