PHEV sales surge in a fleet-dominated May

Sales of plug-in hybrid (PHEV) cars were up by 50% in May, according to new data from the Society of Motor Manufacturers and Traders (SMMT).

The uplift was achieved in the same month that saw fleet and business sales account for two thirds of all new car registrations.

A total of 150,070 new cars were registered in May, marking an uplift of 1.6% year-on-year. Fleet and business sales continue to drive the majority of new car registrations, driving more than 520,000 sales since the start of the year.

Electric car (EV) registrations also grew in May, accounting for 21.8% of the market. Despite this, EV registrations year-to-date have only reached 20.9% market share – still seven percentage points off the 28% mandated by regulation. 

The SMMT warned that significant discounting is still ongoing, despite new model introductions and increasingly affordable offerings. It said while recent adjustments to the ZEV Mandate were welcome, the current market situation is unsustainable for a sector already facing multiple cost pressures.

Mike Hawes, SMMT chief executive, added: "A return to growth for new car registrations in May is welcome but manufacturer discounting on new products continues to underpin the market, notably for electric vehicles.

"This cannot be sustained indefinitely as it undermines the ability of companies to invest in new product development – investments which are integral to the decarbonisation of all road transport.

"Next week’s Spending Review is the opportunity for government to double down on its commitments to Net Zero by driving demand through fiscal measures that boost the market and shore up our competitiveness."

According to the SMMT, halving VAT on new EV purchases would put 267,000 additional new EVs – rather than fossil fuel vehicles – on the road in the next three years and drive down CO2 emissions by six million tonnes a year. Removing EVs from the VED Expensive Car Supplement, meanwhile, and equalising VAT paid on public charging to that levied at home would send a signal that now is the time to switch.

Philip Nothard, insight director at Cox Automotive, said: "The uplift in May registrations is a positive signal for the industry, representing 1.6% year-on-year growth. This supports our recent forecast of reaching 2 million registrations in 2025. However, it is important to consider what underpins this growth, particularly given the increasing influence of new entrants and the ongoing pressure on private sales.

"Consumers continue to face economic uncertainty, and questions remain about how long the fleet sector can continue to prop up the recovery of the UK automotive market and our transition to electric transport. This is particularly pertinent as the current rate of electric adoption still lags behind the ZEV mandate target of 28%."

Petrol remained the most popular powertrain choice, in May, with more than 71,000 petrol cars registered. An additional 20,351 hybrid vehicles were sold, alongside 7,792 diesel models.