Buyers clinging to petrol cars over EVs in worrying signs for car industry

Continued growth in new car registrations (up 26%) has been driven by fleets recording a near 50% rise says The Car Expert, while private new car sales have failed to keep up.

The analysis of the latest data from the Society of Motor Manufacturers and Traders (SMMT) reveals that while businesses appear to be rapidly catching up lost ground, private sales eased upwards by just 6%. Overall sales have risen for the seventh consecutive month, however.

What is more concerning is that the vast majority of this growth has been for petrol-powered new cars, which have increased market share, while electric and plug-in hybrids have lost market share. This suggests that buyers are prioritising the lower purchase price of petrol cars over the lower running costs and environmental benefits of electric vehicles.

February is typically a low-volume month for car sales ahead of the March number plate change, but sustained growth in the new car market over the last half-year should see used prices start to ease as supply improves and more vehicles hit the second-hand market.

The picture could be about to improve for new car prices and finance deals according to the UK’s most comprehensive automotive consumer advice site. The Vauxhall Corsa and Mokka were the two best-selling cars in February, coming after the brand reintroduced 0% finance offers across its range. A much rarer sight than before the COVID-19 pandemic, other manufacturers may follow suit with cheap finance offers.

The popularity of petrol-powered vehicles remains high as sales rise by a third (35%) compared to February last year – an increase of more than 11,000 cars. Their market share for the year-to-date is over 43%, nearly 3% higher than in 2022. Increasingly seen as just a stopgap, plug-in hybrid cars remain relatively unpopular with buyers as their year-to-date market share declines from nearly 8% to just above 6%.

Electric vehicle sales so far this year are only on par with last year, recording exactly the same market share of 14% in 2023 so far, which is underwhelming given the drive to phase out petrol and diesel models in less than seven years.

Stuart Masson, Editorial Director at The Car Expert, said: “It is encouraging that we are seeing consecutive months of growth, and while we don’t want to reach the sometimes unsustainable levels we’ve seen in the past, for consumers this will mean improved availability and more new car deals on offer.

“We’ll likely see the used market settle in coming months as leasing companies and businesses de-fleet vehicles in greater numbers, and it is great to see Vauxhall introduce bold 0% finance offers – with its result this month, this could trigger more deals across the board.

“Although February results need to be taken with a grain of salt with March being far more important, these results are troubling for electric car adoption and follow similar results in January.

“The data shows that overall new registrations were up by 15,000 units in February, but 11,000 of these increased sales were petrol-powered cars. EVs improved by less than 2,000 sales, so we’re seeing petrol cars increasing in market share while EVs have gone down. This is going the wrong way.

“Looking ahead to March, we expect to see Tesla shifting a lot of EVs, which should ‘balance the books’ to a certain degree. But other brands will need to start growing their EV sales to make the necessary inroads on fossil-fuelled vehicles. There are always high expectations in March from across the industry, a lot will be riding on next month’s results and it will be interesting to see how flexible brands become with offers, and whether EV sales increase more rapidly.”