Where are we on the journey to electric?
A strong year, but with bumps in the road
Last year was a pivotal year for electric vehicles. It saw the Zero Emission Vehicle mandate (ZEV) come into force, requiring a rising percentage of manufacturers' sales to be zero emission, i.e. electric, with this percentage rising each year.
It was also a record year for new EV registrations, with over 382,000 new EVs hitting the road in 2024, pushing the number of EVs in the UK car parc to an estimated 1.3 million.
Demand for used EVs remained strong throughout the year, with many retailers seeing used EVs fly off their forecourts. EVs were the fastest-selling fuel type on retailer forecourts in 2024, with 3–5-year-old EVs being the fastest-selling vehicles in the market.
However, whilst these are positive signs for the EV market, challenges do remain. The rise in new car sales is a result of fleet sales, with 3 in 4 new EV sales being to fleet, as consumer demand for new EVs flat through the year. With the ZEV targets on the rise, pending the outcome of the ongoing review, manufacturers will find it a challenge to meet rising targets without incentives to drive consumer uptake.
Brand loyalty is shifting as new entrants take a bite of the market share
Brands and retailers have long been able to rely on loyalty from buyers, with loyalty rates traditionally around 40%, and often higher for established brands.
But the journey to electric is shaking up this norm. We are seeing that EV buyers are far more open to switching brands, with only 19% buying the same brand as their previous car.
This is particularly good news for those Chinese new entrant brands making their way into the UK market. These brands have strong EV offerings, which UK consumers are willing to consider. Our latest consumer research shows that 2 in 5 buyers are willing to at least consider a new entrant brand for their next car.
These new entrant brands will bring the number of brands available in the UK to over 70, up from just 45 5 five years ago. But this rise won't mean an increase in overall new car sales. Rather, these new entrants are seeking to take the share of the established brands. There will be winners and losers in the coming months and years as all brands seek to consolidate their market share in an EV-driven market.
What does it all mean for retailers?
The future of our industry is certainly electric, and retailers need to be ready for the transition. Whilst new EV sales are a challenge, the volume of EVs entering the market will only rise in the coming years. Retailers must be engaging with EVs now to ensure future business success.
Furthermore, the rise of electric and new entrants presents retailers with both challenges and opportunities.
The erosion of loyalty opens up the EV market in ways we haven’t historically seen, and those retailers geared up for EVs have the opportunity to win new customers. But there is also a risk of losing customers if retailers' EV offerings don’t match the market demand. Choosing the right brands to engage with and stock will prove more crucial than ever, and this challenge is only enhanced by the suite of new brands entering the market.
What else can you expect on the road ahead for automotive retail? Find out more in The Road Ahead for Automotive Retail report.