The UK new car market achieved a 12-year high in January, according to figures published by the Society of Motor Manufacturers and Traders (SMMT).
In total, 174,564 vehicles left showrooms last month – a 2.9% year-on-year uplift and the highest level since 2005.
Significantly, however, the alternatively fuelled vehicle segment grew 19.9% to take a record 4.2% market share – the first time 4% has been surpassed. Across other fuel types there was a mixed picture with diesel registrations down -4.3% but new car registrations of petrol cars grew 8.9%.
Mike Hawes, SMMT chief executive, said: “It’s encouraging to see alternatively fuelled vehicles benefiting from this positive growth, reaching a record market share.
“After record growth in 2016, some cooling is anticipated over the coming months, but provided interest rates remain low and the economy stable, the market is in a good position to withstand its short-term challenges.”
Across the market, private motorists led the growth, registering 76,729 new cars – up 5%. Fleet and business registrations taken together grew marginally by 1.2%, up from 96,628 registrations in January 2016 to 97,835 last month.
Chris Bosworth, director of strategy at Close Brothers Motor Finance, said: “After a nine month period of sustained decline, it’s interesting to note that new-car private sector sales are again on the increase.
“It’s also encouraging to see that the growth of the AFVs shows no sign of slowing, with that segment posting nearly 20% growth to take a record 4.2% market share. Given that last year, particularly in the second half, we saw consumers flocking to the used-car sector and preferring to finance 1-3 year ‘nearly new stock’ over brand new vehicles, it’ll be interesting to see whether the upturn of private new car registrations continues throughout 2017.
“Increasing production levels, registrations and consumers moving from the new to the used car market has had a positive knock-on effect for car-dealerships throughout the UK. Our recent dealer satisfaction survey highlights this, with 65% of dealers expecting growth this year.
“Looking ahead, the effects of rising inflation on consumer spending and the changes to salary sacrifice from April 2017 to the business market will be the major challenges to the private sales market.
“Innovations, including more sophisticated driver aids, increase in safety improvements, and the uptake of ULEV, will be key in encouraging consumers to purchase new over used vehicles in 2017.”
Lauren Pamma, head of consultancy at Lex Autolease told Fleet News that she expects to see a strong few months as companies make the most of existing Benefit in Kind taxation rules up until April.
She added: “It’s encouraging to see continued growth in alternative fuel vehicles despite the Vehicle Excise Duty changes, which, come April will make many ULEVs less tax efficient than their traditional fuel counterparts up to 2020. In the long-term, a more ULEV orientated vehicle policy makes both environmental and commercial sense for fleets.”