Key events
How is demand for electric vehicles holding up? SMMT chief Mike Hawes was asked earlier.
He said it was “okay” –- adding that it will take time for electric cars to get into the mass market, and that journey will be bumpy.
It was okay in June, but what we have seen is something of a plateau flattening out. When these vehicles were first on the market, there really was high demand for them, because those were the early adopters. We need to get that from the early adopter phase into the mass market. That is never going to be smooth. So the manufacturers are doing all they can to stimulate that demand with really attractive deals. But given the economic conditions and the fact that these are still vehicles that are more expensive than petrol and diesel cars that preceded them, there is still something of a challenge.
Introduction: UK new car sales hit 1m in first half for first time since 2019
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s general election day in the UK. Voting has now begun and polling stations will be open until 10pm. Polling suggests it could bring an end to 14 years of the Conservative party in government, and lead to Labour opposition leader Keir Starmer being installed in Downing Street as the new prime minister. You can read more on our main election blog here:
New car sales in the UK grew by 5% year on year in June, according to preliminary data from the industry body, the Society of Motor Manufacturers & Traders.
It means that the number of new cars leaving forecourts has exceeded 1m in the first half of the year, the first time since 2019 it has passed that milestone.
Mike Hawes, the SMMT’s chief executive, said on BBC radio 4’s Today programme:
It’s kind of a relief to get there. We know we’re clearly heading for around 2m new car sales this year, which is a bit below par. But obviously things are changing in terms of the number of vehicles potentially being bought. But to get there, given all the difficulties we’ve had over the last five years and indeed beyond that, it’s a real boost for the industry.
It’s almost entirely business and fleet sales. There’s a number of reasons behind that. Obviously the backdrop of the economic conditions isn’t great, and households are on a squeeze. And most people, private buyers, tend to buy through finance with inflation high and interest rates high, it’s made the cost of purchase more expensive.
But the carrot has been for the businesses, the incentives, the company car tax that is there for the fleet and the business buyer, has stimulated demand, especially for electrified vehicles. So that’s what’s really driving the growth.
The market share of pure battery electric new cars remained on a par with last year, at around 16-17%. Final figures for June will be published by the SMMT at 9am.
In Germany, factory orders fell unexpectedly in May, declining by 1.6% on the previous month. Economists had expected a rise of 0.5%.
The minutes of the US Federal Reserve’s June meeting showed that policymakers acknowledged the US economy appeared to be slowing and that “price pressures were diminishing”. But they still opted for a wait-and-see approach before committing to interest rate cuts, according to minutes of the 11-12 June session.
The minutes, which were released last night, noted a weak May reading in the consumer price index as one among “a number of developments in the product and labor markets” that supported a view that inflation was falling.
Wage growth had slowed, some officials noted, while others pointed to price cutting among major retailers and reports from their own business contacts that “pricing power had declined.”
However, policymakers concluded that more time and data was needed before they could decide on a rate cut.
Officials “did not expect that it would be appropriate to lower the target range for the federal funds rate until additional information had emerged to give them greater confidence that inflation was moving sustainably toward” the 2% target, the minutes said.
The Agenda
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9am BST: UK SMMT new car sales for June
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8.30am BST: Eurozone, France, Germany, Italy construction PMIs for June
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9.30am BST: UK S&P Global construction PMI for June
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12.30pm BST: ECB monetary policy meeting accounts
