New car sales are growing by 5 percent with more than 1 million sold in the first half of year – the largest number since 2019.
The figures come from the Society of Motor Manufacturers & Traders (SMMT) which said pure battery electric vehicles made up around 16-17 percent of the total.
Sales are being driven almost entirely by businesses, rather than private drivers who continue to suffer the fall-out from the cost of living squeeze.
Mike Hawes, the SMMT’s chief executive, told the BBC radio 4’s Today programme that it was a “relief” to get to the 1m figure for the first half of the year, but there is more to do.
He said: “We know we’re clearly heading for around 2m new car sales this year, which is a bit below par. But obviously things are changing in terms of the number of vehicles potentially being bought. But to get there, given all the difficulties we’ve had over the last five years and indeed beyond that, it’s a real boost for the industry.”
He added: “It’s almost entirely business and fleet sales. There’s a number of reasons behind that. Obviously the backdrop of the economic conditions isn’t great, and households are on a squeeze.
“And most people, private buyers, tend to buy through finance with inflation high and interest rates high, it’s made the cost of purchase more expensive.
“But the carrot has been for the businesses, the incentives, the company car tax that is there for the fleet and the business buyer, has stimulated demand, especially for electrified vehicles. So that’s what’s really driving the growth.”
Mr Hawes described demand for electric vehicles as no more than “okay” against the background of high prices.
“We have seen is something of a plateau flattening out,” he said.
“When these vehicles were first on the market, there really was high demand for them, because those were the early adopters.
“We need to get that from the early adopter phase into the mass market.
“That is never going to be smooth. So the manufacturers are doing all they can to stimulate that demand with really attractive deals.
“But given the economic conditions and the fact that these are still vehicles that are more expensive than petrol and diesel cars that preceded them, there is still something of a challenge.”
The biggest selling car in the month of June was the Kia Sportage ahead of the Nissan Juke and Tesla Model Y.
Mike Hawes added: “The year’s midpoint sees the new car market in its best state since 2021 – but this belies the bigger challenge ahead.
“The private consumer market continues to shrink against a difficult economic backdrop, but with the right policies in place, the next government can re-energise the market and deliver a faster, fairer zero emission transition.
“All parties are agreed on the need to cut carbon and replacing older fossil fuel based technologies with new electrified powertrains is the essential step to achieving that goal.”
