Two-year growth for new car registrations in the UK!

This monthly cap-hpi overview provides an update on the UK's current new and used car markets.

cap-hpi will report on new car registrations to the end of June 2024 and used car activity at the time of writing. All information is correct as of 26 th July 2024.

New car sales The Society of Motor Manufacturers and Traders (SMMT) reported the 23 rd month of year-on-year growth for new car registrations in June 2024, with a modest increase of 1.1% over the same month last year. 179,263 cars were registered in the month, making 1,006,763 year-to-date, and the first time the new car market has achieved over 1 million registrations in the first half of the year since 2019. Registrations are 6.0% up on the first 6 months of 2023, but still down 20.7% on the same period in 2019.

Source: SMMT Fleet registrations continue to drive the growth, up 14.2% in June, with 105,868 registrations and a 59.1% share.

Yearto-date, Fleet registrations are up 22.3% compared to 2023, with a share of 59.6%. Private retail registrations fell for the ninth month in a row, down 15.3% for a 37.7% share. Year-to-date, this amounts to a 12.0% decline and 38% market share.

Some of this can be apportioned to the rise of salary sacrifice, which count as Fleet registrations, but nevertheless retail demand has waned, particularly for Battery Electric Vehicles (BEVs). Within the fleet volumes, Daily Rental registrations continued to increase, up 56% in June compared to last year, but 54% down compared to 2019. Year-to-date, registrations to rental companies are up 100% on 2023 but down 59% on 2019.

With most manufacturers needing to sell a higher proportion of BEVs than they have so far this year, to achieve the Zero Emission Vehicle mandate figure of nominal 22% BEV share, rental companies are not yet a natural fit for high volumes of this fuel-type – widespread rental customer adoption is not there yet, particularly in the leisure market.

Alternatively-fuelled vehicles do continue to increase in volume overall, with BEVs up 7.4% for the month, for a 19.0% share and 34,034 registrations.

Year-to-date, growth is at 9.2% and share at 16.6%, with 167,096 BEVs registered. Hybrid Electric Vehicles (HEVs) increased by 27.2% in June (26,702 units/14.9% share) and 15.2% so far in 2024 (137,838 units/13.7% share), whilst Plug-in Hybrid Electric Vehicles (PHEVs) increased by 30.0% in the month (16,604 units/9.3% share) and are up 31.2% for the year so far, with share at 8.1%.

The second half of the year will be a fascinating and challenging one for manufacturers as they strive to avoid stringent fines for not hitting alternatively fuelled vehicle targets. There is a real likelihood that many will reduce sales of internal combustion engine vehicles to aid the percentage of BEV share.

Used car retail activity

The positive sentiment within the used car retail market has continued throughout July, with reports indicating that the market remains “steady” overall. This suggests that consumer demand for used cars still remains at least consistent with June, reflecting a reasonably good month for retailers.

As we predicted last month, the recent General Election or the Euro 24 football tournament did not widely impact consumer activity, with anecdotal feedback confirming that enquiry levels and sales rates remained at least consistent to both May & June. This is also backed up by examining the number days to sell within our internal retail database, which currently sits at around 40 days for cars of all ages, and of all mileages, and again remains unchanged from both May & June.

Now looking closely at fuel types for vehicles up to 10 years old and sold within the past month, Petrol is again the most desired by retail consumers and selling the quickest at around 38 days, followed by Hybrid (HEV) at 39 days, BEVs (Battery Electric Vehicle) & Plugin Hybrids (PHEV) at 40 days, with Diesel sat at 42 days.

What is interesting is when looking at the same 10-year age profile of vehicles, the average advert price for Plugin Hybrid is c.￡27,500 with an average age of 39 months, compared to BEV which is sat at c.￡22,500 with an average age of 32 months. For context, Petrol had an average advert price of just over ￡17,000 but at a higher average age of 52 months. If you then slice the data another way and reduce the age banding to 0-5 years-old for vehicles sold within the last month, BEVs then took an average 39 days to sell with an average advert price of c.￡23,000 and at 30 months-old, with PHEVs selling at 39 days but with a much higher average advert price of c.￡29,500 and was 31 months-old. Again, for context, Petrol is sat at 36 days to sell and with an average advert price of c.￡20,000 at 33 months-old, with non-plugin Hybrid (HEV) selling at 38 days at an average advert price of c.￡21,500, and at 30 months-old. This really does highlight the superb value that BEVs can offer to retail consumers right now, when compared to the other fueltypes/drivetrains currently being offered for sale. Desirable price-points continue to exist and across all fuel-types within the retail market, with the dealers “sweet spot” remaining unchanged at around the ￡15,000 to ￡20,000 price points, depending on fuel-type or drivetrain.

When we specifically focus on BEVs sold in the last month, and at the 3 to 5 year age points, which closely aligns between the pricing sweet spots mentioned afore, the average days to sell remains at 32 days. It is interesting to note that when comparing BEVs to petrol vehicles between 3 to 5 years old, BEVs outperform petrol vehicles with an average time to sell of 32 days versus 36 days. Some examples of individual BEV models that sold even faster than the average are:- Tesla Model 3 at 21 days, Polestar 2 at 25 days and the Hyundai Kona EV at 29 days. In the May editorial, we highlighted that our analysis of retail data revealed that only 17% of independent dealers had advertised a BEV in the past 6 months.

Unfortunately, there has been no improvement in this figure, and remains unchanged at 17%. Additionally, there has been no significant improvement among franchise dealers and supermarkets either, as only 46% of supermarkets and 45% of franchised dealers have advertised a BEV over the same 6 month period.

This raises the question once again of whether these dealers are missing out on good profit opportunities by not stocking BEVs. It is important to note that dealers who do stock electric vehicles are enjoying good profitable margins, and additionally, dealers who stock BEVs priced within the retail "sweet spots" are experiencing comparable, if not better, stock turnover rates compared to many traditional internal combustion engine models. Retail pricing reductions remain at similar levels to both May and June, and in line with seasonal activity, with dealers only looking to reduce prices once a car has reached a certain number of days in stock.

This is still just normal repricing activity where retailers are looking to turn ageing stock a little faster. In summary, used car retail remains in a stable and healthy position but now with a more seasonal feeling to it, and with the school holidays now in full flow, maintaining similar levels of business could be a little more challenging.

Used car remarketing activity

The wholesale arena continues to perform well for most vendors, and for the time of year, with performance metrics remaining at least on par with June. The trade market still continues to feel like it’s performing better than the retail one, as trade buyer demand remains very healthy for good clean stock, and at the right age and mileage points. Strong competitive bidding for these desirable cars is certainly clear to witness across the auction network. Volumes of good clean stock is not in abundance though, due to the lack of new vehicle registrations during the COVID affected years, so buyers are having to spread themselves thinly across many trade platforms, auction sales and auction providers, in order to give themselves chance of purchasing even a small amount of stock. This can be very frustrating for buyers who put in a lot effort and hard work pre-sale, in order to ensure that they are only purchasing stock that meets their own criteria. That said, not everything is making strong returns and the market can be very mixed overall. Poor condition, high mileage and mechanically challenged stock continue to be hardest area of the market, with vendors often offloading stock wherever they can, and at prices below CAP clean, CAP average or even CAP below figures, which are being reflected in our CAP Live figures on a daily basis.

The fleet and lease sector is where buyer demand is the strongest and remains a continuing theme of the past few months. Auctions conversions remain consistently high with returns often achieving close to CAP clean, or sometimes above. Direct wholesale from fleet/lease and rental is a little more mixed, but in the main, still positive overall. Again, our attention to detail is important to highlight as lots of vehicles have been moving in different directions based on a wide range of factors such as fuel type, mileage, duplication of models and trims, provenance, and of course condition. Upon analysing some historic Battery Electric Vehicle data in isolation from the start of 2023, a notable improvement in auction conversion rates is now very evident. Previously, it typically took nearly 3 sale attempts to successfully sell a BEV, however, the current average has significantly decreased to just 1.3 attempts. This in comparison to petrol cars which now takes 1.5 attempts, on average, before being sold. These positive trends are further supported by the increased availability of sold data for BEVs, as we have already received the same volume of BEV data for 2024 as we did for the entirety of 2023, with June recently setting a record for the most data received in a single month. This can only be viewed as a real positive and a potential turning point for BEVs as they become a much more normalised fuel type/drivetrain within the used and retail markets. Overall, the wholesale and trade markets continue to perform well due to the consistent low supply and healthy demand. It still remains a sellers’ market but only for the right stock!