THE UK new car market recorded its best February performance for two decades as registrations rose 14.0% to 84,886 units, according to the latest figures from the Society of Motor Manufacturers and Traders.

It was the 19th month of consecutive growth, which has primarily been driven by fleets investing in the latest vehicles. Indeed, fleets and businesses were responsible for the entirety of February’s increase, with registrations up 25.2% and 15.5% respectively. Private uptake continued to struggle, with a 2.6% decline to record a 33.7% market share. February is traditionally volatile as the lowest volume month of the year, with buyers often electing to wait until March and the new number plate.

Electrified vehicles recorded robust growth, with hybrid electric vehicles (HEVs) rising 12.1%, but taking a marginally smaller year-on-year market share of 12.7%. Plug-in hybrids (PHEVs) recorded the largest proportional growth for the month, rising 29.1% to reach 7.2% of the market. Battery electric vehicle uptake similarly outpaced the rest of the market, rising 21.8% to account for 17.7% of registrations, an improvement on last year’s 16.5%.

While February’s growth is positive and demonstrative of ongoing robust demand for the latest vehicles, the long-term picture will become clearer in March, the busiest market month. While BEV market share and volumes continue to grow during the first year of mandated targets for manufacturers, the increase in uptake is entirely sustained by fleets, thanks to compelling fiscal incentives. Private buyers account for fewer than one in five (18.2%) new BEVs registered in 2024 so far.

A faster, fairer market transition depends on more private buyers switching but the lack of significant incentives is holding back many. The Budget is an opportunity for the Chancellor to stimulate demand by halving VAT on new EVs for three years, amending proposed Vehicle Excise Duty (VED) changes, and reducing VAT on public charging in line with home charging.

While consumers do not pay VAT on other emission reduction technologies such as heat pumps and solar panels, private EV buyers pay the full 20% levied on all cars, whether they be electric, petrol or diesel. Halving VAT on new EV purchases would save the average buyer around £4,000 off the upfront purchase price – yet cost the Treasury less than the Plug-in Car Grant that was scrapped in 2022.

Similarly, upcoming changes to Vehicle Excise Duty next year would see the majority of BEV buyers effectively penalised £1,950 for going electric due to the ‘expensive car’ supplement. Furthermore, those unable to charge a BEV at home currently pay a ‘pavement penalty’ of 20% VAT on public charging – quadruple the rate paid by those with the opportunity to charge at home.

Mike Hawes, SMMT Chief Executive, said: “The new car market’s ability to deliver growth continues with its best February for 20 years and this week’s Budget is an opportunity to ensure that growth is greener. Tackling the triple tax barrier as the market embarks on its busiest month of the year would boost EV demand, cutting carbon emissions and energising the economy. It will deliver a faster and fairer zero emission transition, putting Britain’s EV ambition back in the fast lane.”

John Wilmot, CEO, car leasing comparison site LeaseLoco said that the positive momentum witnessed in the new car market last year has seamlessly transitioned into the first part of 2024, with the strongest February in two decades setting an optimistic tone for the rest of the year.

“Consumer confidence is steadily rising, buoyed by anticipated declines in inflation. If coupled with a reduction in interest rates, this trend promises continued growth and stability for the automotive industry.

“Electric vehicle sales remain on an upward trajectory, driven by fleet registrations. The imminent release of more budget-friendly EV models this spring will expand driver options and ensure momentum isn’t lost.

“Governmental support is equally crucial, especially with growing evidence of private drivers hesitating towards the EV transition. Urgent action is imperative to address barriers such as high purchase costs and inadequate charging infrastructure. Decisive measures are essential to drive Britain’s electric transition forward.”

James Hosking, Managing Director of AA Cars commented: “The momentum gained in the new car market last year has rolled into the first part of 2024, and dealers have plenty of reasons to be optimistic after the best February for 20 years.

“The launch of the new number plates on March 1 should provide another boost to demand and help end the first quarter of the year on a strong note.

“Consumer confidence is generally improving, and further falls in inflation will help the industry move forward smoothly, particularly if this is soon accompanied by a drop in interest rates.

“EV sales continue to increase to the detriment of diesel vehicles, and the expected launch of more affordable models this spring will provide even greater choice to drivers.

“The commitment from manufacturers to continue to deliver a wide variety of EVs in different classes and affordability levels will be crucial in helping this portion of the market further increase its share of sales over the coming years.”

Chris Leslie, Commercial Director at MAF Finance Group, said: ” The nation’s automotive sector appears to be powering through the start of the new year, with the announcement today that the new car market has recorded its strongest February for two decades.

“February is generally a low volume month, so the fact that car registrations rose 14% and buyers have not waited until the spring suggests the difficulties of recent years might be on wane. We will not get a clear idea of the full-year picture until March, traditionally the busiest market month for purchases, but the signs remain promising.

 “There is also good news to be had on battery electric vehicle (BEV) uptake, which accounted for over 17% of registrations and is an improvement on last year’s figures.

“The government will be slightly concerned about the number of purchases by private buyers though. The fact that private buyers have accounted for fewer than one in five new BEVs registered so far in 2024 suggests more government incentives are required to stimulate the general public into action.”