Strong March auto sales face uncertain outlook
Britain’s new car market recorded its strongest March performance since 2019, with registrations rising 6.6% year-on-year to 380,627 vehicles, according to the Society of Motor Manufacturers and Traders (SMMT). However, industry leaders caution that the positive headline figures may not reflect future demand, as much of the growth was driven by orders placed before the outbreak of the Iran war on February 28.
SMMT chief executive Mike Hawes noted that the encouraging figures conceal ongoing challenges, particularly rising costs and economic uncertainty. March is traditionally the busiest month for car sales in the UK, and the latest increase was supported by solid demand from private buyers. The market has now recorded year-on-year growth each month since December.
Despite this momentum, the outlook has become less certain as the escalating conflict in the Middle East has pushed oil prices higher and raised concerns about global economic stability. The conflict has involved U.S. and Israeli strikes on Iran, Iranian retaliatory attacks on Israel, U.S. bases and Gulf states, and disruptions to shipping through the Strait of Hormuz, a critical global energy route.
Economists warn that higher energy costs could weaken consumer confidence and limit affordability. Elliott Jordan-Doak, senior economist at Pantheon Macroeconomics, said the recent growth trend in registrations may slow in the coming months as rising fuel costs and the possibility of interest rate increases by the Bank of England’s Monetary Policy Committee weigh on household budgets.
At the same time, higher fuel prices could encourage more drivers to consider electric vehicles. The SMMT reported that battery electric cars achieved their highest monthly sales volume on record in March, although their market share of 22.6% remains below the UK government’s 33% target for 2026.
Industry experts suggest that uncertainty over fuel prices is prompting more consumers to explore electric alternatives. Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said enquiries for electric vehicles are increasing as buyers seek protection from volatile petrol and diesel prices. However, the conflict may also raise energy and supply chain costs, potentially increasing production expenses for electric models.
Among manufacturers, Tesla recorded a 20% increase in UK registrations compared with the previous year, reaching 8,599 units. Chinese automaker BYD posted even stronger growth, with registrations rising nearly 134% to 15,162 vehicles, highlighting intensifying competition in the electric vehicle segment.
While March’s figures demonstrate continued resilience in the UK car market, analysts expect economic pressures linked to geopolitical tensions and rising costs to shape demand in the months ahead.
