Incentives and new car discounts: Carmakers working harder to shore up UK market share

Incentives and new car discounts: Carmakers working harder to shore up UK market share

Time Stamp: November 13, 2023 7:42 AM
Source Node: 2381484

Rapid growth in fleet segment new car sales is a sign of carmakers’ return to their traditional habits of large volume incentives and increased supply to car rental companies.

Although the UK’s new car market is expected to remain below two million units in 2023, the diminishing lead times, return of finance deposit contributions and ramp up of supply to large fleets are signs of the return to a ‘push’ market in which increased marketing is critical to helping new cars find their owners.

Brands including Jaguar, Nissan and Mercedes-Benz have attractive consumer discounts on certain models at present, according to the CarBuyer website.

Philip Nothard, insight director at Cox Automotive, said: “Our analysis tells us that tactical registrations, a relic of the industry’s past, are taking place on the part of OEMs. That could help explain the increased percentage of reported fleet registrations, in addition to OEMs returning to the recently constrained fleet channel. It is clear they are moving to resolve their market share.”

October’s new car registrations data shows 29% growth in the fleet market.

The SMMT predicts overall new car registrations to reach 1.886 million by the end of the year, a rise of 2.1% on July’s expectations. 

Cox Automotive predicts a higher result of 1.94m registrations by the end of 2023, rising to 2.02m in 2024.

“Both the new and used markets continue to face challenges, such as the cost-of-living crisis hindering demand,” Nothard said. “In 2024, the sector will witness a surge in OEMs transitioning to new agency or hybrid dealer networks across the UK and Europe. This shift may present volume and market share fluctuations, as adapting to new systems, processes and strategies takes time. 

“The new car numbers and our outlook for the coming years reaffirm that this industry is characterised by volume and is positive for the economy, as it will generate more jobs and income.

“We foresee continued growth for 2024 albeit at a slower pace than in 2023. And we also believe the muted private demand for new EVs has to be tackled by more government incentives. It remains to be seen whether the 2035 ICE deadline will continue to impact the sale of new EVs.”

Many industry observers believe a 2.2m annual market is the UK’s ‘natural’ level when the UK economy and consumer confidence are both healthy. Last decade registrations climbed to reach 2.7m in 2016 as favourable exchange rates allowed OEMs to force stock into the market through incentives while still making profit.

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