Finance key to driving switch to electric vehicle
PUBLISHED: 14:22 03 May 2018 | UPDATED: 14:22 03 May 2018
Simon Gray, of Credo Asset Finance, looks at a market faced with challenges as a result of the great fuel debate.
The Society of Motor Manufacturers (SMMT) confirmed what most of the industry already knew earlier this year – that 2017 was the first annual decline for the new car market in five years, falling 5.7pc.
And this trend has continued through the all-important January to March first quarter.
As expected, the worst hit have been diesel sales, with registrations plummeting 37pc last year. Many experts are making the point that, while diesel cars affect air quality, they produce less carbon dioxide than petrol engines, a key factor in global warming, but the speed of decline in demand for diesel cars continues to be of concern.
The latest tax changes announced by the government do nothing to encourage consumers to exchange their older diesel vehicles for new lower-emission models.
Petrol car sales were essentially stable, up 0.5pc, while demand for electric and hybrid vehicles continued to rise, up 6pc, year on year. Sales of plug-in hybrids remain particularly strong, up 18pc on 2017 in March, but it could have been even higher as supply side issues – not enough cars to meet demand – could well have impacted the level of overall alternative-fuel registrations.
There is little doubt that the tone of the fuel debate has had a detrimental effect on the new and used car markets. The Committee on Climate Change has warned ministers that three-fifths of new cars must be electric by 2030 to meet greenhouse gas targets. But how can that be achieved? Are people going to turn electric?
Research has revealed that 59pc of recent car buyers who chose not to go electric said it was due to the higher up-front expense of electric cars. They are more expensive, and there is more the government and industry can do, working together, to help make these vehicles more affordable. However, with more than 80pc of new car buyers using finance to fund the purchase, is that a real problem?
A new, top-of-the range Nissan Leaf looks expensive at more than £28,000 – but at a current monthly price of £375 on personal contract purchase (PCP), and with the monthly savings you’d make on fuel, road tax etc, it looks a very different proposition.
Therefore many see finance as a key enabler for mass consumer purchases of electric vehicles. Infrastructure and consumer anxieties related to range and efficiency need to be addressed as well but if attractive finance deals aren’t offered, or even worse, are not properly promoted by the car manufacturers then consumers just won’t change.
Article sponsored by Credo Asset Finance, 85 Yarmouth Road, Norwich, NR7 0HF.
Phone 01603 703180.