Analysis: 2020 UK car sales hit 28-year low, but EV market grows rapidly

Industry body says major investment in charging infrastructure and battery production needed to be ready for 2030 combustion engine ban

UK car registrations fell by around 29.4 per cent in the UK last year, with the 1.63 million cars sold the lowest total since 1992 as the industry was hit hard by the effects of Covid-19 lockdowns. But sales of both electric cars and plug-in hybrids both rose sharply, with plug-in cars now accounting for more than 10 per cent of UK sales.

According to preliminary data from the Society of Motor Manufacturers and Traders (SMMT), 1,631,064 cars were sold in the UK last year. That's around 600,000 fewer cars were sold in the UK in 2020 than in 2019, representing the largest year-on-year decline since 1943, when sales slumped because many car plants were repurposed to produce military equipment.

The bulk of the sales decline in 2020 was attributed to the first lockdown from March-June last year, where many dealerships were shut. During the second lockdown in November last year, dealerships were able to continue offering ‘click-and-collect’ online sales - which will also be allowed during the new lockdown recently introduced in England by the UK government.

At the start of 2019 – before the coronavirus pandemic began – the SMMT had estimated that around 2.2 million cars would be sold in the UK this year. The final figure of 1.63 million represents a loss to the industry of around £20.4 billion, and a loss to the UK government of £1.9 billion in VAT receipts.

“The big issue last year was the effect of Covid and that is continuing into 2021. Overall, there’s no surprise it was a very, very difficult year,” said SMMT chief executive Mike Hawes. “There are unprecedented levels and it’s challenging the industry continuously.”

But while the overall figures were grim, there were some positive signs for the industry. Sales of battery electric and plug-in hybrids both increased substantially, with plug-ins accounting for one in 10 of all cars sold in the UK last year. The UK is set to ban sales of all non-zero emission cars, with the exception of certain hybrids, by 2030.

*How Covid-19 impacted the UK industry in 2020*

Hawes said that, based on provisional data, the UK fared worse than Germany, France and Italy, but slightly outperformed Italy. He added: “It’s notable that all those countries had some form of incentive [for buyers, to boost new cars sales], sometimes confined just to PHEVs and battery electric vehicles. We haven’t, so we haven’t seen any artificial demand. 

“That means the 29% decline is something the industry is basically having to cope with,” who noted that the SMMT didn’t expect to regain those sales in the coming years. 

The sales decline was particularly sharp in the fleet and business sectors. In December, sales of private cars fell by 26.6 per cent, with fleet sales declining 31 per cent and business sales dropping 41 per cent.

While every sector of the market declined in terms of total sales last year, some performed better than others. Sales of superminis showed the smallest decline in terms of total sales, and the overall market share of such vehicles grew from 29.7% to 31.2%.

“If you think about the effects of Covid with some people coming out of shared or public transport and going into the market for a new or used car, it makes sense in that regard,” said Hawes. “It will be a rocky few months but we hope as the year goes on it gets more positive.”

Sales of specialist sports cars rose by 7.0%.

*EV and PHEV sales rise dramatically*

The rise in the number of BEVs and PHEVs on sale in the UK helped to significantly increase sales of both last year. A total of 108,205 EVs were sold, representing a 180% year-on-year rise and rising from 1.6% of the overall UK car market to 6.6%. Meanwhile, PHEV sales rose 90% to 66,877, rising from 1.5% to 4.1% of the market.

That means that 10.7% of all cars sold in the UK in 2020 had some level of zero emission running capability and could be plugged in. With standard hybrids included, 17.5% of cars registered in the UK last year were electrified. Sales of mild hybrid petrol and diesel cars both increased.

While encouraging, Hawes noted those figures would need to continue rising given the UK government’s target of banning most internal combustion engined cars by 2020.

“Overall it’s a significant achievement that we want to continue, and we expect that to continue,” said Hawes. 

Hawes noted that the Covid-19 restrictions helped EVs to achieve a higher market share this year, noting that they made up a larger percentage of vehicles sold during the first lockdown, in part due to certain firms such as Tesla having waiting lists for EVs and offering contactless delivery.

While they remain the two most popular fuel types, the market share of both petrol and diesel cars declined in 2020. Sales of diesels fell 55.0%, from 581,774 in 2019 to 261,772, while mild hybrid diesel sales rose from 33,931 to 60,953. Combined, diesel-engined cars now account for 19.7% of the UK market. That compares to 25.2% in 2019 and represents their lowest market share since 2001 when they accounted for 17.8%.

The 903,961 petrol cars sold represented a 39.0% decline on the 1,482,409 registrations in 2019, while mild hybrid petrol sales grew 184.1% from 41,955 to 119,179. When combined, standard and mild hybrid petrol vehicles account for 62.7% of the overall car market, compared to 64.8% in 2019.

*New lockdown casts uncertainty on 2021*

The SMMT had originally forecast that the market would recover to sales of around two million units this year, although that was made ahead of the November lockdown. With further restrictions now being introduced and likely to be in place for several months Hawes said it was “highly unlikely” that figure would be delivered, and the SMMT is currently working on a revised forecast for 2021. Hawes anticipates the revised figure will be under two million units.

“Last year we lost around 500,000-750,000 units between March and May, and we never recovered it,” said Hawes. “There was a slight uptick in July, but we never got that original loss back. Private buyers may come back in the market later this year, but fleets just delayed. So any loss that we now see in January and February may come back, but it depends on mitigating factors.

“It’s important we can still go click-and-collect, because that’s the minimum we need to keep sales going and to keep the manufacturing going.”

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