The new car market will be hit with challenges and pressures at the end of 2024 that will be reminiscent of, and may even surpass, those felt during the 2008 economic crash and the pandemic in 2020, a new report claims.
The reason for this is the expected volatility created in the final quarter of the year by the ZEV mandate – the new law that demands a percentage (22% in 2024) of car makers' total sales are EVs – with manufacturers making strategic and tactical plays in order to hit the government's legislative target.
These moves may come in the form of restricting ICE and PHEV sales and “aggressively” pushing EV stock into fleets because called-for government-backed incentives have yet to materialise.
Predicted as part of Cox Automotive’s new car forecast, this could create “an unrealistic and unnatural market", the firm warns, with long-term ramifications such as lower manufacturer and dealer profitability, less consumer choice and a hit to residual values.
“Manufacturers are caught between a rock and a hard place,” said Cox Automotive insight director Philip Nothard. “They’re under impossible financial pressure, facing increasing competition, and carrying the responsibility to fast-track the transition to zero-emission motoring.
“They have little choice but to push hard to make their EV products appealing to buyers, be that through financial incentives or by limiting the alternatives.
“Dealers will inevitably take on some of this burden, as will fleets and private buyers, in the form of unpredictable residual values when these heavily discounted EVs start to flood the used market in 12-36 months' time.”
He added: “The year is progressing at pace, and with no government concession on the ZEV timetable or any support mechanisms in sight, the risk of significant challenge, unlike anything seen in over a decade, in Q4 is genuine.”
The warning comes in spite of the report forecasting that new car registrations will end the year 6.1% up on 2023, hitting 2,018,446 sales. This comes off the back of the market reaching the half-year million-sales mark for the first time in five years
The report concludes that while the headline number is positive, especially in the context of the post-pandemic market, the way these sales will be achieved could “have painful ramifications across the sector”.
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