Analysis: Demand for plug-ins rose, while fossil fuels dipped

Click and collect lessened some of the lockdown sales hit

That’s the precis of the sales story for new cars in 2020 but the devil is in the detail

New car registrations fell by around 29.4% in the UK last year, with the 1,631,064 cars sold the lowest total since 1992, as the industry was hit hard by the effects of Covid-19 lockdowns. But new sales of both electric cars and plug-in hybrids both rose sharply, with plug-in cars now accounting for more than 10% of UK sales.

Data from the Society of Motor Manufacturers and Traders (SMMT) reveals 680,076 fewer new cars were sold in the UK last year than 2019, the largest year-on-year fall since 1943.

The bulk of the sales decline in 2020 was attributed to the first lockdown, from March to June last year, when many dealerships were shut. Although sales fell during the second lockdown, in November, dealerships were able to continue offering ‘click and collect’ online sales – which will also be allowed during the current lockdown introduced in England by the UK government.

Before the pandemic began, the SMMT estimated around 2.2 million cars would be sold in the UK last year. The final figure represents a loss to the industry of around £20.4 billion and a £1.9bn loss to the UK government in VAT receipts.

“There’s no surprise it was a very, very difficult year,” said SMMT chief executive Mike Hawes. “These are unprecedented levels and it’s challenging the industry continuously.”

While the overall figures are grim, there are some positive signs for the industry. Sales of battery-electric vehicles (BEVs) and plug-in hybrids (PHEVs) both increased substantially. Those rises will be viewed against a backdrop of the UK’s intention to ban sales of all non-zero-emission cars, with the exception of certain hybrids, by 2030.

*How Covid-19 impacted the UK industry in 2020*

Hawes said the UK car market outperformed Spain but fared worse than Germany, France and Italy, adding: “It’s notable that those countries had some form of incentive [for buyers, to boost new cars sales], sometimes confined just to PHEVs and battery-electric vehicles.”

The sales decline was particularly sharp in the fleet and business sectors. While sales of private cars fell 26.6%, fleet sales dropped 31.1% and business sales slumped 43.3%.

Aside from specialist sports cars (up 7.0%), every sector of the market declined in terms of total sales last year, but some performed better than others. Sales of superminis showed the smallest fall in total sales and their overall market share grew from 29.7% to 31.2%.

*EV and PHEV sales increase dramatically*

The rise in the number of BEVs and PHEVs on sale in the UK helped to significantly increase sales of both last year. A total of 108,205 EVs were sold, representing a 185.9% year-on-year increase and rising from 1.6% of the overall UK car market to 6.6%. Meanwhile, PHEV sales rose 91.2% to 66,877, increasing from 1.5% of the market to 4.1%.

This means that 10.7% of all new cars sold in the UK in 2020 had some level of zero-emission running capability and could be plugged in. With standard hybrids included, 17.5% of cars registered in the UK last year were electrified. Sales of mild-hybrid petrol and diesel cars both increased.

Although that’s encouraging, Hawes noted that these figures will need to continue rising, given the UK government’s target of banning most internal-combustion-engined cars by 2030. He added that meeting this date requires “a strong industrial strategy from government that really ensures the UK remains competitive, attracts investment and remains a strong market [for EVs].” He also said “massive investment” is needed, both to develop battery manufacturing capability and the infrastructure required for mass EV uptake.

“We need an investment in infrastructure of something in the tune of £16bn, with a lot of that going into public on-street charging because not everyone has a driveway or designated parking spot with access to their own charging infrastructure,” said Hawes.

Although they remain the two most popular fuel types, the market share of both petrol and diesel cars declined in 2020. Sales of diesels fell 55.0%, from 581,774 in 2019 to 261,772, while mild-hybrid diesel sales rose from 33,931 to 60,953. Combined, diesel-engined cars now account for 19.7% of the UK market. That compares with 25.2% in 2019 and represents their lowest market share since 2001, when they accounted for 17.8%.

The 903,961 petrol cars sold in 2020 represents a 39.0% decline on the 1,482,409 registrations in 2019, while mild-hybrid petrol sales grew 184.1% from 41,955 to 119,179. When combined, standard- and mild-hybrid petrol vehicles account for 62.7% of the overall car market, compared with 64.8% in 2019.

*New lockdown casts uncertainty on 2021*

The SMMT had originally forecast that the market would recover to sales of around two million units this year, although that was made ahead of the November lockdown. With further restrictions now being introduced and likely to be in place for several months, Hawes said it is “highly unlikely” that figure will be delivered, and the SMMT is currently working on a revised forecast for 2021. Hawes expects the revised figure to be under two million units.

“Last year, we lost around half a million units between March and May, and we never recovered it,” said Hawes. “There was a slight uptick in July, but we never got that original loss back. Private buyers may come back in the market later this year, but fleets just delayed.

“So any loss that we now see in January and February may come back, but it depends on mitigating factors.

“It’s important we can still click and collect, because that’s the minimum we need to keep sales going and to keep the manufacturing going. It will be a rocky few months but we hope as the year goes on it gets more positive.”

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