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UK Car Industry Continues Resilient Recovery with Strong New Registrations in June 2023

David Borland, EY UK & Ireland Automotive Leader, comments on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures for June 2023

“The UK car industry continued to demonstrate resilience and ongoing recovery in June 2023, as it recorded over 177,000 new registrations, representing a 25.8% year-on-year increase and marking an eleventh consecutive month of growth. 

“The recovery also continues in supply, with manufacturing output increasing by almost 27% in May, which was the fourth consecutive month of year-on-year growth. Although this demonstrates a sustained recovery for manufacturers and dealers after weathering many of the stubborn challenges from the pandemic and supply chain disruptions, the trend of fleet customers dominating the growth at 37.9% masks a weaker recovery for end consumers which increased by less than 15%.

“The growth of Battery Electric Vehicle (BEV) sales continued with an increase of 39.4% in June, but the growth of BEV market share is starting to slow. In contrast, Plug-in Hybrid Electric Vehicles (PHEVs) had their most significant market share since February 2022 last month. Furthermore, recent data from EY’s Mobility Consumer Index revealed that more than half (54%) of car buyers in the UK are contemplating a non-combustion engine car as their next purchase. This is largely driven by increasing buying intent for PHEVs and Hybrids, which aligns with the recent market development with increases of 65% and 40% respectively for June.

“On a global basis, June saw some interesting developments involving both new and traditional manufacturers, with Electric Vehicle (EV) financial challenges and new strategic supply agreements, as well as some record-setting figures in the pure battery market. There were also strategic decisions made by several manufacturers adopting the North American Charging Standard (NACS), a clear sign of the importance of leveraging existing infrastructure, standardising, and achieving market scale. The industry is changing at pace around the world.”

Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, looks forward

“Despite the challenges posed by inflationary pressures and rising interest rates, demand for new cars has remained strong. In the coming months, legislation will play a key role in supply and demand, as new requirements on the Zero Emission Vehicle (ZEV) mandate and Rules of Origin (RoO) are due to come into effect on 1 January.

“There are calls from industry to delay in the implementation of the RoO legislation until 2027. The rules are part of the Brexit Trade & Cooperation Agreement, aiming to stimulate local production and sourcing of parts for electric cars and batteries. A delay will likely limit the impact of further tariffs in a market that imports 90% of the cars it sells and exports 80% of the cars it builds.

“The automotive industry has demonstrated its ability to adapt and contribute to key national agendas, such as levelling up, achieving net zero emissions, advancing global Britain, and promoting economic growth. However, to effectively compete with not only European and American manufacturers but also emerging market players from Asia, the industry requires further support. This support can come in the form of clear post-Brexit trade policies with Europe and tax provisions that encourage and facilitate increased investment in research and development. This would help the industry navigate a future where innovation, sustainability, and global competitiveness will be paramount.”

This article was originally published by a www.ey.com . Read the Original article here. .

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