Electric cars offer hope after sales fall by third in 'lost year' for motor industry

New car sales fell by almost a third during 2020 amid the coronavirus crisis and uncertainty over Brexit, with further pain likely in the months ahead.

The latest figures showed that private vehicle demand fell by more than a quarter, while sales of vehicles to company car fleets fell by almost a third. Picture: Lisa Ferguson

Car registrations across the UK dropped to just over 1.6 million, according to industry group the Society of Motor Manufacturers and Traders (SMMT), which warned of a “rocky” few months ahead.

The trade organisation said a 10.9 per cent decline in December wrapped up a “turbulent” 12 months, which saw demand fall by 680,076 units to the lowest level of registrations since 1992.

New car sales fell by around 29 per cent on 2019, marking the biggest year-on-year decline since 1943.

The SMMT said that against a backdrop of Covid restrictions, an acceleration of the end of sale date for pure petrol and diesel cars to 2030, and Brexit uncertainty, the industry suffered a total turnover loss of more than £20 billion.

Karen Hilton, chief commercial officer at Heycar, said: “As forecourts shut once again as the entire UK returns to lockdown, the industry is set for more pain in the early part of the year.

“But, if 2020 has proved one thing, it is how resourceful the sector can be. In the grip of its biggest crisis in generations, dealers have responded impressively – finding new and innovative ways to engage with customers by upping their game in the digital arena.”

James Hind, founder and chief executive of car comparison site www.carwow.co.uk, said: “Looking ahead, pent-up demand is expected from consumers hungry to reward themselves for a year of frugality and limited options to spend, and with a far larger choice of electric and plug-in-hybrid cars than a year ago, great deals are currently available from manufacturers and car dealers.”

The latest figures showed that private vehicle demand fell by more than a quarter, amounting to a £1.9bn loss of VAT to the Exchequer, while sales of vehicles to company car fleets fell by almost a third.

The SMMT reported a “bumper” year for battery and plug-in hybrid electric cars, which accounted for more than one in ten registrations, up from around one in 30 in 2019.

Demand for battery electric vehicles (BEVs) surged 185.9 per cent to 108,205 units, while registrations of plug-in hybrids (PHEVs) leapt 91.2 per cent to 66,877.

Most of these were company cars, indicating that private buyers need stronger incentives to make the switch, as well as more investment in charging infrastructure, especially public on-street charging, the SMMT said.

The organisation’s chief executive Mike Hawes said 2020 “will be seen as a ‘lost year’ for automotive, with the sector under pandemic-enforced shutdown for much of the year and uncertainty over future trading conditions taking their toll”.

He added: “However, with the rollout of vaccines and clarity over our new relationship with the EU, we must make 2021 a year of recovery.

“With manufacturers bringing record numbers of electrified vehicles to market over the coming months, we will work with government to encourage drivers to make the switch, while promoting investment in our globally renowned manufacturing base – recharging the market, industry and economy.”

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