In a significant shift within the UK automotive market, manufacturers are implementing sales restrictions on petrol and hybrid vehicles to comply with government-imposed zero emission targets. This strategy, aimed at avoiding substantial fines, is creating a complex landscape for both dealers and consumers.
Robert Forrester, chief executive of Vertu Motors, one of Britain's largest dealership chains, has revealed that car makers are deliberately delaying deliveries of petrol and hybrid vehicles until 2025. This tactic is a direct response to the zero emission vehicle (ZEV) mandate, which requires 22% of cars sold by manufacturers to be electric starting in 2024, with the target set to increase to 80% by 2030.
"In some franchises there's a restriction on supply of petrol cars and hybrid cars, which is actually where the demand is. It's almost as if we can't supply the cars that people want, but we've got plenty of the cars that maybe they don't want."
The ZEV mandate, introduced by the UK government to accelerate the transition to electric vehicles, imposes a £15,000 fine for each petrol car exceeding a manufacturer's quota. This policy has led to an unusual market dynamic where the supply of in-demand petrol vehicles is constrained, while less popular electric vehicles (EVs) are in abundance.
Forrester criticizes the current implementation of the ZEV mandate, arguing that it forces manufacturers to sell EVs at a loss, potentially discouraging investment in UK car production. He warns that this could have far-reaching consequences for the automotive industry and the broader economy.
The situation has resulted in a notable decline in new car sales. Vertu Motors reported a 5.8% decrease in new car sales volume for the five months ending July 31, 2024. Conversely, the used car market remains robust, with September 2024 expected to be particularly busy.
The Society of Motor Manufacturers and Traders (SMMT), founded in 1902, has revised its forecast for EV sales in 2024, now predicting they will account for 18.5% of the new car market, down from an earlier estimate of 19.8%. This adjustment reflects the ongoing challenges in stimulating private consumer demand for EVs, despite significant discounts offered by manufacturers.
The UK government's ambitious plan to ban the sale of new petrol and diesel cars by 2030 aligns with its broader goal of achieving net zero emissions by 2050. However, the current market dynamics suggest a complex transition period ahead. The automotive industry, which contributes significantly to the UK economy and supports over 800,000 jobs, faces the challenge of balancing consumer preferences with regulatory requirements.
As the UK continues to expand its EV infrastructure, with over 30,000 public charging points as of 2024, the industry's ability to adapt to these rapid changes will be crucial. The coming months will likely see further developments as manufacturers, dealerships, and policymakers navigate this evolving landscape.