The UK new car market experienced its strongest March since 2019, with total registrations increasing by 6.6% year-on-year to reach 380,627 units. However, this growth largely reflects orders placed before the escalation of the Iran conflict, raising concerns about the sustainability of this momentum amid growing economic uncertainties.
March traditionally marks the peak month for new car sales, and this year’s figures were buoyed by robust demand from private buyers. The Society of Motor Manufacturers and Traders (SMMT) highlighted that much of the month’s performance stemmed from transactions initiated prior to the outbreak of hostilities in the Middle East on February 28.
Despite the positive headline figures, the outlook for the UK car market appears uncertain. The intensifying conflict involving U.S.-Israeli strikes on Iran, retaliatory Iranian attacks on Israel, U.S. bases, and Gulf states, alongside the closure of the Strait of Hormuz, has driven oil prices higher and cast a shadow over global economic prospects.
Senior economist Elliott Jordan-Doak from Pantheon Macroeconomics warned that the recent streak of rising car registrations is likely to stall in the coming months. He cited soaring energy costs and potential interest rate hikes by the Bank of England’s Monetary Policy Committee as factors that will reduce consumer affordability.
In a notable development, the SMMT suggested that the Middle East crisis and the resulting surge in fuel prices could stimulate greater interest in electric vehicles (EVs). However, they also cautioned that rising energy and supply chain expenses might offset some of these gains.
Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, observed that uncertainty over fuel costs is driving increased consumer inquiries about EVs, as buyers consider them a more attractive alternative to traditional petrol and diesel cars.
March marked the best month ever for battery electric vehicle volumes in the UK, although their market share remained at 22.6%, still below the government’s target of 33% by 2026. Tesla’s new registrations in the UK rose by 20% compared to the previous year, reaching 8,599 units. Meanwhile, Chinese manufacturer BYD saw an even more significant surge, with registrations jumping nearly 134% to 15,162 units, SMMT data.
