EV adoption and pandemic aftershocks proceed to hamper automotive market

The UK automotive market is anticipated to hit its peak when it comes to petrol automobile numbers in 2024 though the trade continues to grapple with the the post-pandemic scarcity of almost 3 million automobiles not offered throughout that interval, stricter Zero Emission Car (ZEV) targets, rising competitors from new manufacturers and fashions – all at a time of lacklustre urge for food for electrical autos (EV). 

In accordance with Auto Dealer’s 2025 forecast, the brand new automotive market is projected to develop for a fourth consecutive yr, reaching round 1.98 million registrations in 2025, up 2% from the 1.94 million anticipated in 2024.

Regardless of this progress, the market stays 14% beneath the pre-pandemic peak of two.31 million registrations recorded in 2019.

A number of challenges are shaping the trade. Stricter Zero Emission Car (ZEV) targets are exerting strain, with a required EV market share of twenty-two% in 2024 and 28% in 2025. Nonetheless, EV adoption is lagging behind these benchmarks, with EVs predicted to account for less than 18% of the market in 2024.

Personal new automotive gross sales are declining considerably, anticipated to hit 740,000 registrations in 2024 – a 27% drop in comparison with 2019 and the bottom degree in over 20 years. Rising prices are additional complicating issues, as the common value of a brand new automotive has climbed from £31,000 in 2019 to £43,020.

Auto Dealer notes that competitors is intensifying, with 17 further manufacturers and 81 new fashions launched since 2019 and that the common purchaser researches 17 manufacturers, reflecting an urge for food for options.

To deal with this, producers are adopting a “conquest-led” technique centered on attracting new prospects whereas leveraging data-driven advertising and marketing to keep up model loyalty and meet ZEV targets.

Reductions have risen to 9% as of October 2024, in comparison with 7.4% a yr earlier, reflecting a partial return to pre-pandemic “push” gross sales techniques.

The EV market, whereas rising, is underperforming regulatory expectations. By 2025, Auto Dealer estimates that the EV market share is predicted to rise to 23%, however this nonetheless falls wanting the 28% ZEV mandate.

As a consequence, it says producers might want to ramp up efforts to transform conventional petrol and diesel prospects to EVs, with focused advertising and marketing and client incentives essential to driving adoption and compliance.

Whereas the brand new automotive market faces vital headwinds, the resilience of the used automotive market supplies a counterbalance, providing some stability amid the continuing transformation.

The affordability hole created by rising new automotive costs, coupled with enduring demand, has bolstered the used automotive sector, which continues to carry out strongly.

Gross sales are anticipated to develop from an estimated 7.61 million in 2024 to 7.70 million in 2025, placing the market inside 3% of pre-pandemic ranges.

Commenting on the forecast, Auto Dealer’s business director Ian Plummer stated: “It’s been one other landmark yr for automotive retailing, one which’s included a variety of challenges, not least the introduction of ZEV targets, constrained provide, altering finance guidelines, and the Finances, but additionally exceptionally robust used automotive demand, report ranges of engagement on our platform, fast pace of sale, and the stabilising of retail costs.

“And with the extra attractively priced and accessible inventory in latest months serving to to gas new automotive curiosity, the general retail market is getting into 2025 on a powerful footing.”

Auto Dealer stated the challenges dealing with the automotive market stay deeply influenced by the aftershocks of the pandemic, significantly within the used automotive sector. The results of three million unsold new automobiles through the pandemic proceed to ripple by the automobile parc, shifting the provision of used automobiles throughout age segments.

This yr, the variety of 3-5-year-old automobiles within the parc dropped by 37% in comparison with 2019, falling from 4.8 million to three million. By the top of 2025, this determine is anticipated to say no additional to 2.9 million – the bottom degree on report. As these autos age, their shortage will start to have an effect on the 5-10-year-old phase.

The dynamics of gas kind throughout the parc are additionally shifting considerably. 2024 is projected to be the height yr for petrol automobiles within the UK parc, with their numbers beginning to decline from 2025 because the adoption of electrical autos (EVs) accelerates.

EVs are set to comprise 1.66 million autos subsequent yr, a 33% enhance from the 1.25 million in 2024, equating to a 5% share. This development is mirrored on platforms like Auto Dealer, the place EV inventory rose 32% year-on-year in October, whereas petrol inventory dropped by 7%, marking seven consecutive months of decline.

By 2027, there shall be almost 1 million fewer petrol automobiles within the parc in comparison with as we speak. Regardless of this, demand for petrol automobiles is anticipated to stay strong, driving up costs and intensifying competitors for inventory.

Consequently, Auto Dealer notes, having a well-defined technique for used EVs will grow to be more and more necessary. As the provision of EVs grows and petrol autos diminish, understanding these tendencies shall be essential for sellers aiming to fulfill shifting client preferences and keep profitability.

Plummer concluded: “2025 is ready for progress, however this yr’s complexities will stay, and in some instances, tighten, significantly throughout the new automotive market, the place a quickly rising array of manufacturers shall be competing for the eye of an more and more fickle new EV purchaser.

“Manufacturers and retailers alike can not afford to standstill and might want to undertake a conquest mindset subsequent yr, in addition to specializing in what they will excel at – delivering nice product, an incredible expertise, and an incredible efficiency, all of which we’ll proceed to assist by our know-how, knowledge and our investments.”