As we enter the second half of 2024, the UK car market is expected to witness a kaleidoscope of changes shaping the future of the automotive industry. Trends are driven by a myriad of factors, from shifting consumer attitudes and technological advancements to regulatory policies and economic fluctuations. The way you engage with cars and the auto market as a whole will not be the same in the next few years. In this article, we will delve into the top trends that are poised to steer the UK car market’s trajectory in the coming months.
1. Electric Vehicle Dominance
Electric vehicles (EVs) are no longer a fringe concept in the UK car market. They are rapidly becoming mainstream, driven by supportive government policies, consumer acceptance, and industry investment. The year 2024 is seen as a pivotal point for the electric car segment.
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Analysing data from the Society of Motor Manufacturers and Traders (SMMT), the first half of 2024 saw a surge in electric vehicle sales, overtaking petrol and diesel for the first time. Consumer preference for electric cars is being fuelled by the dual benefits of environmental sustainability and reduced running costs.
The UK government’s ambitious plans to ban new petrol and diesel car sales by 2030 is acting as a catalyst for the growth of this segment. In response, car manufacturers are ramping up their electric offerings. As per industry data, by the end of the year, the number of electric models available in the UK will nearly double.
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2. Rise in Car Subscription Services
The consumer trends in the UK car market are not confined to the type of vehicles people buy, but also how they acquire them. The automotive industry is witnessing a shift from vehicle ownership to usership, with car subscription services gaining traction.
Car subscription models provide consumers with the flexibility to switch vehicles without committing to long-term ownership or leasing contracts. According to data from automotive research firm Frost & Sullivan, the number of subscribers for such services in the UK will grow by 45% this year.
Moreover, with the increased adoption of electric vehicles, which often require less ongoing maintenance, subscription services are seen as a viable option for many consumers. They provide a hassle-free way to drive an electric vehicle without worrying about battery life, depreciation, or charging infrastructure.
3. Advanced Safety and Autonomous Features
Another trend redefining the UK car market is the growing popularity of advanced safety features and autonomous driving technology. While fully autonomous vehicles may still be a few years away, semi-autonomous features are becoming standard across various car models.
A report from McKinsey & Company suggests that by the end of 2024, almost 50% of all new cars sold in the UK will come equipped with at least one autonomous feature. These can range from advanced driver-assistance systems (ADAS) like automatic emergency braking and lane-keeping assist to more sophisticated systems like semi-autonomous highway driving.
Consumers’ increasing demand for safety and convenience, coupled with technological advancements, is driving the growth of this segment. Concurrently, manufacturers are investing heavily in autonomous technology, both to meet consumer demand and to stay competitive in the evolving market.
4. Online Car Sales Picking Pace
The pandemic has accelerated the shift towards online car sales, with consumers increasingly comfortable with buying vehicles without ever stepping into a dealership. Online platforms offer a hassle-free, time-efficient alternative to traditional car buying and are set to represent a significant share of the automotive retail market in the years to come.
Data from Auto Trader suggests that online sales of new cars in the UK will account for around 30% of total sales by the end of the year. The move towards e-commerce is also helping dealers to reach a wider audience, reduce overheads, and adapt to the changing dynamics of car sales.
5. Growing Demand for Used Cars
The used car market is another area experiencing significant growth in 2024. As per data from the SMMT, used car sales in the UK are expected to reach a record high this year. The surge in demand for used cars can be attributed to various factors, including supply chain disruptions affecting new car availability and rising prices of new cars driven by inflation.
The used car market offers consumers a cost-effective alternative, especially in the wake of economic uncertainties and post-pandemic recovery. Furthermore, certified pre-owned programs and warranties are making used cars a more attractive proposition for buyers. The trend of used car sales growth is expected to continue in the foreseeable future.
6. Proliferation of Car Finance Options
The UK car market has been witnessing a major shift in how consumers finance their car purchases. More and more, people are turning to car finance options such as Personal Contract Purchase (PCP), Hire Purchase (HP) and leasing, as they offer affordability and flexibility over outright purchases.
According to the Finance & Leasing Association (FLA), about 91% of private new car sales were made on finance through dealerships in the year leading up to May 2024. This illustrates a clear move away from direct ownership and towards more flexible arrangements.
Car finance options have become progressively popular due to their ability to spread the cost of a vehicle over a period of time. This is especially true for electric cars, which often have a higher upfront cost compared to their petrol or diesel counterparts. Financing allows consumers to drive a newer or more expensive vehicle that might be out of reach otherwise.
Moreover, various car finance companies offer packages that include car insurance, road tax, and maintenance costs in the monthly payment, making it a hassle-free experience for consumers. As the market forecast depicts a continuous growth in this pattern, more innovations and competitive offerings can be expected in the car finance sector.
7. Shift to Battery Electric Vehicles (BEVs)
While the electrification of the automotive industry is clear, there is a more specific trend towards Battery Electric Vehicles (BEVs). As opposed to Plug-in Hybrid Electric Vehicles (PHEVs), BEVs are purely electric, with no internal combustion engine. They rely solely on charging from the electric grid, with longer ranges becoming more common in newer models.
The demand for BEVs is being driven by a number of factors. Firstly, regulatory policies such as the UK’s 2030 ban on new petrol and diesel car sales are putting pressure on car manufacturers to develop and market more BEV models.
Secondly, improvements in battery technology, affordability and charging infrastructure are making BEVs increasingly viable for consumers. Data from the SMMT shows that BEVs accounted for 12.7% of total car registrations in the first quarter of 2024.
Meanwhile, the global automotive industry is heavily investing in the production and promotion of these vehicles. The auto trader and classic car markets are also beginning to see the value in BEVs, with demand expected to increase in the future.
Conclusion
The UK car market is in the midst of profound transformation. These trends indicate a move towards a more sustainable, digital, and customer-centric industry. The swift transition to electric vehicles, particularly BEVs, is setting the tone for the future of the automotive industry. The rise of car subscription services and finance options speaks volumes about the changing dynamics of car ownership.
Simultaneously, the growth of online car sales indicates a shift in the traditional dealership model. Consumers are now comfortable making significant purchases online and dealers are making strides to adapt to this change. The growth of the used car market, driven by supply chain disruptions and economic uncertainties, further illustrates the changing landscape of the industry.
Embracing these trends and understanding their implications is crucial for stakeholders in the UK car market. Consumers, car manufacturers, dealers, and regulators must work together to navigate this rapidly changing landscape and leverage these trends for a more sustainable and efficient automotive future.