David Borland, EY UK & Ireland Automotive Leader, comments on the SMMT new car registration figures for August 2022:
“The trilemma of financial, energy and supply chain pressures continues to impact all sectors, with automotive at the center of the storm. showed some green sprouts with a 1.2% increase from 2021. SMMT data showed nearly 69,000 cars were registered, but that’s still 25% less than the same month before the pandemic. positive, production levels in major markets are trending upwards, with demand for semiconductors falling due to the cost of living and rising inflation reducing consumer demand for expensive purchases like computers personal and electronics.
Manu Varghese, from EY’s Advanced Manufacturing & Mobility team in the UK and Ireland, adds:
“Although most automakers reported favorable second quarter results due to strong demand and a transformation in inventory management practices, higher component prices weighed on margins as OEMs continued to feel the strain of supply chain pressures.A British luxury carmaker reported a pre-tax loss of £285million in the first half, while another global carmaker cut 3,000 jobs in August as part of its cost rationalization measures – worrying signs as we potentially head into a recession.In addition, urgent action is needed to reduce the high energy costs facing car factories if their competitiveness is to maintained, an obvious challenge for the new Prime Minister.
Electric vehicle (EV) sales
“Although August saw a slight drop in gasoline prices for the first time in months, it was not enough to have a significant impact on electric vehicle sales or consumer demand. UK electric vehicle sales continued to show positive growth, with SMMT data revealing 14,000 plug-in vehicles were sold in August 2022. Pure battery grew by 35% d Year on year, plug-in hybrids continue to disappear with a 23% reduction This follows the global trend, with plug-in vehicles now over 10% as more nations and states introduce sales bans for vehicles with combustion engines.
“However, the need of the hour is to increase investment in gigafactories in the UK. Europe, led by Germany and France, has announced that around 35 new gigafactories will be operational from ‘by 2035. As more carmakers partner with battery suppliers around the world, the UK needs to ensure it remains a top destination by investing now.
“The industry continues to be disrupted, with automakers scrambling to find the strategic balance of their internal combustion engine and electric vehicle divisions. This opens up new opportunities for industry convergence with energy players looking to invest in the automotive sector and to exploit new sources of value.” A sign of the automotive sector’s heritage, the Opening Ceremony of the Commonwealth Games in Birmingham demonstrated the importance it holds in people’s imaginations. Alexander stadium has seen decades-old Rovers, Jaguars and Minis showcased to the world.As the industry navigates these turbulent times, industry executives and shareholders are looking to Whitehall for help and funding into battery capacity, charging infrastructure with clarity on trade.