UK car market up, but outlook clouded by expected tax changes

Market Overview - The UK new car market showed stability in October with a 0.5% increase in registrations, totaling 144,948 units [1] Electrified Vehicles Performance - Electrified vehicles were the only powertrain technologies to experience growth, with battery electric vehicle (BEV) registrations rising by 23.6%, adding 7,028 units, resulting in a 25.4% market share, the second highest this year [2] - Plug-in hybrid vehicle (PHEV) registrations increased by 27.2%, accounting for 12.1% of the market, while hybrid electric vehicles (HEV) grew by 2.1%, claiming a 13.3% share [2] - Combined, electrified vehicles represented 50.8% of new car registrations for the second consecutive month [2] Year-to-Date Performance - Year-to-date, the BEV market has grown by 28.9%, with 386,244 units registered, surpassing the total for the entire year of 2024 with two months remaining [3] - BEVs now constitute 22.4% of all new sales, driven by significant manufacturer investment and government support through the Electric Car Grant (ECG) [3] Future Market Risks - The SMMT warns that future market growth may be jeopardized by government plans to end Employee Car Ownership Schemes (ECOS), which are crucial for attracting talent in the UK automotive sector [4] - The proposed taxation on ECOS vehicles could lead to the closure of these schemes, limiting access to new zero-emission vehicles for many workers [4] Economic Impact of ECOS Changes - Approximately 100,000 cars are supplied via ECOS annually, representing about 5% of the new car market; changes could depress growth and negatively affect nearly-new and used markets [5] - The SMMT estimates that over £1 billion in revenue could be lost to the industry, risking 5,000 manufacturing jobs, while the Treasury could face a £0.5 billion loss from VAT and Vehicle Excise Duty receipts [5] Market Forecast - GlobalData projects the UK car market to reach around 2 million units by 2025, although this forecast is subject to risks [6] - The outlook for the UK car market remains challenging, with cautious sentiment due to tightening fiscal policies and weak immediate growth prospects for the UK economy [7]