CEO Update

A full scale recovery requires a fully charged future

06 January 2023 #CEO Update

The new year brings with it annual new car and van registration figures, and data for 2022 shows that the UK new car market fell -2.0% last year to 1.61 million units. The pandemic continues to cast a long shadow over the global automotive industry and its impact, coupled with geopolitical events, meant that last year was another highly challenging period.

Global semiconductor shortages lingered, constraining deliveries, although tentative signs of easing supply issues were seen in growth in the latter part of the year, even against a deteriorating economic backdrop.

Even more positively there was a landmark in that new battery electric vehicles (BEVs) became the second most popular powertrain in Britain after petrol and, combined, all plug-in vehicles accounted for more than a fifth of new registrations – a record high of 368,617 units.

The uplift demonstrates manufacturers’ ongoing investment in new vehicles and determination to prioritise deliveries of the latest zero emission models. But we need to do more, and ensuring drivers in every part of the country can benefit from these vehicles depends on broader policies to encourage greater uptake during 2023.

While the industry recognises the need for fair vehicle taxation, for instance, plans to introduce VED on BEVs from 2025 with the same ‘premium’ threshold as internal combustion-engine cars will disproportionately penalise those moving to electric.

Chargepoint provision also remains a barrier. The government’s EV Infrastructure Strategy forecast that the UK would require between 280,000 and 720,000 chargepoints by 2030. It chose to set a lower-end figure of approximately 300,000 as the ambition. Germany’s target is one million. The charging industry recognises it must be built out “ahead of need” but to meet even 300,000 by 2030 would still require over 100 new chargers to be installed daily. The current rate is around 23.

Manufacturers, meanwhile, face a Zero Emission Vehicle Mandate regulation in just a year’s time. For this to work, however, for EV uptake to be accelerated and a vibrant new car market re-established, industry must have sufficient time and flexibility to respond. But the consultation – never mind the regulation – is still awaited meaning it will likely be too late for any significant adjustments in product or volumes in time for a 2024 start.

While 2022 saw the car market struggle but then rally, it’s a different story in the light commercial vehicle (LCV) sector. Van registrations fell by a fifth against a strong 2021 when order books were filled with post-pandemic fleet renewal demand. Despite strong orders in the first half of the year, supply issues restricted the global production of vans driving LCV registrations to the lowest level since 2013.

There was better news for electric vans, however, with registrations up by 31% on 2021 and a return to overall market growth is anticipated this year. But if this crucial sector is to continue delivering for the economy, society and the environment, action is needed from all stakeholders, particularly in charging infrastructure and fiscal frameworks, enabling more van buyers to make the switch.

We begin 2023 poised for recovery, with an outlook targeting new car and van market growth worth some £10 billion this year. However, we remain exposed to broader geopolitical and economic events and government must deliver a clear action plan that helps drivers to go electric, builds infrastructure befitting a nation aiming for inclusive electric mobility and puts in place legislative and fiscal frameworks that inspire rather than impede.

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