The spread of COVID-19 in the UK triggered a lockdown which severely impacted vehicle sales in March. Car sales fell 44.4% compared to the same month a year earlier and for the year-to-date are down 31.0%. The primary reasons for this decline appear to be the closure of car dealerships, along with the progressive shut down of automotive manufacturer assembly plants and parts supply chains across the globe. March typically presents the highest peak in UK car sales each year due to the introduction of a new licence plate. Therefore, while car sales have dropped from 458,054 (2019) to 254,685 (2020) it has likely been exacerbated by unfortunate timing with the imposition of stringent social distancing measures.
A closer look at the data indicates that fleets cut new car registrations by 47.1% and private buyers by 40.4%. It suggests that businesses with fleet operations may have pre-empted the economic slowdown that COVID-19 would bring, and instead of ordering new vehicles they have opted to postpone vehicle renewals as a critical way of conserving cash. If the lockdown had commenced earlier in March, the impact on vehicle sales would have been significantly worse.
Data from China in February highlights that car sales fell by ~96%, and automotive firms in GB are expecting similar drops here. European markets have also seen similar falls: Italy (85%), France (75%) and Spain (69%).
Despite this, the silver lining in a troubled month was the continued growth of EV sales. Battery Electric Vehicles (BEVs) recorded the single highest sales in a month at 11,694 for the class, up 197.4% on March 2019. Across all EV powertrains recorded by the Society for Motor Manufacturers and Traders, 56,863 were sold in March. This is more than the entirety of Q119, and highlights the magnitude of change in car buyers preferences along with improved incentives to buy an EV and greater choice of vehicle models.
Another significant milestone was achieved in March, where the market share for all EV powertrains reached 22.3% of car sales. This exceeded the share taken by diesel powered cars (17.6%).
Driving growth, particularly for BEVs, is company car tax change. From 6 April, cars with zero carbon emissions qualify for 0% company car Benefit-in Kind tax. Zenith, an FN50 leasing company, have already reported sizeable increases in orders for EVs with increases of 300% for salary sacrifice and 250% for company car fleets. Coupled with support in the form of grants for cars and charge points, EVs have become an attractive option for employers and employees.
Whether the government’s substantial range of EV uptake stimulating measures can enable fleets and private buyers to keep defying macro-economic trends during lockdown remains to be seen. Beyond lockdown, with cash being tight, EVs may increasingly look like the sensible choice for many fleet operators.
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