Fleets and businesses drive new car market

The latest data set from the Society of Motor Manufacturers and Traders (SMMT) reveals that fleets and businesses are continuing to drive the new car market with registrations up 21 per cent year-on-year.

In the year to June 2024, company cars accounted for 62 per cent of the new car market, with 623,882 registrations. This is an 8 per cent rise year on year, compared with figures from 2023.

In June, fleet and business registrations rose by 14.5 per cent year on year, compared to June 2023.

Importantly, electric vehicle (EV) uptake continued to rise in June:

• Plug-in hybrid (PHEV) registrations rose by 30 per cent, taking a 9.3 per cent market share.
• Hybrid electric vehicle (HEV) uptake grew by 27.2 per cent, taking 14.9 per cent of the market.
• Battery electric vehicle (BEV) registrations jumped 7.4 per cent, taking the largest EV market share of 19 per cent.

Industry experts have attributed these figures to a growing number of company car drivers, with more than 40,000 employees now paying company car tax. This is a 5.5 per cent rise and marks the first increase since 2015 according to figures from HM Revenue & Customs .

This growth is partially attributed to salary sacrifice schemes becoming increasingly popular.

Salary sacrifice involves the reduction of an employee’s gross salary in return for a non-cash benefit, such as a company car. These schemes offer savings on income tax and national insurance contributions for both employee and employer, with the responsibility and ownership of the vehicle remaining with the company.

Currently, the UK government is offering incentives for the use of electric vehicles as company cars. Whilst company car drivers are subject to benefit-in-kind tax (BIK), those with EVs pay substantially less than those with petrol or diesel vehicles, at a rate of just 2 per cent. This incentive is set to expire in April 2025.