Vehicle markets need Budget to drive growth, not reverse it
Decarbonising heavy vehicles is fundamental to the UK’s ambitions for net zero so SMMT’s latest market figures, published this week, show an encouraging picture whereby a quarter of all new buses, coaches and minibuses joining UK roads are now zero emission. That green growth is helped by strong demand for single and double decker buses, such that, despite a third quarter decline in demand for minibuses, year-to-date the overall market remains ahead.
SMMT data also shows a record quarterly volume of new zero emission HGVs registered, quadrupling to represent 2.4% of the market, as more fleets realise the benefits of zero emission operations. Growing volumes more substantially will be tough, given the market is normalising following the past few years’ robust growth. However, the overall share of the market can certainly be grown if supported by ambitious plans for depot infrastructure and grid connections.
Removing barriers to growth in the electric car market is even more pressing, as the sector faces tough and pressing mandated targets to decarbonise. Industry is right to be deeply concerned, therefore, by the rumoured Autumn Budget proposals for pay-per-mile for EVs – a move which risks deterring consumers, adding to existing fiscal disincentives such as the VED Expensive Car Supplement and higher VAT on public charging. There is no doubt that government revenues from fuel duty are being eroded as more drivers move away from fossil fuelled vehicles. However, rather than singling out a particular technology – one that the industry is challenged to grow – we need a fundamental rethink of road taxes to ensure we have a more strategically aligned, fair and future-ready taxation system.
The Budget must also prioritise growth – growth of the economy, growth of industry and growth of the market. The last Budget actually put new car market growth in jeopardy, however, with plans to end Employee Car Ownership Schemes. The measure risks up to 80,000 new car sales annually, with a severe hit to profitability, jobs and a half billion pound hole in Treasury tax income. It is a counterproductive approach just when industry and government need to drive growth, not hamper it, and must be reversed.
SMMT will continue to champion the importance of investment and we look forward to our next Meet the Funder event in December, hosted in partnership with the Green Finance Institute, matching automotive start-ups, scale-ups and established suppliers with venture capital, private equity and auto industry players. Find out more on how to get involved here.
Finally, with less than one week to go until SMMT’s 108th Annual Dinner, the event is set to be one of the busiest ever. We’re excited to welcome so many senior figures from across automotive, aligned industries, government and media, to discuss our sector’s year – and the opportunities that lie ahead. I hope to see you there.