UK new car sales fell 9% in July as supply chain issues persist | Automobile industry

UK new car sales fell by nearly a tenth in July due to supply chain issues, forcing the industry body to cut its full-year forecast, even as it expects chip shortages to decrease in the coming months.

New car registrations in July fell 9% from a year earlier to 112,162 vehicles as shortages continued to hamper automakers’ ability to fill orders, according to the Society of Motor Manufacturers and Traders ( SMMT). Sales fell for the fifth month in a row, although the drop was the smallest on record this year.

Large corporate fleets fell 18.2% to 50,014 vehicles, while consumer sales held steady at 59,847.

A global shortage of semiconductors, exacerbated by Covid shutdowns at major manufacturing and logistics hubs in China, as well as disruption caused by Russia’s invasion of Ukraine, have all limited production of new cars.

The SMMT said the first half of 2022 had been tougher than expected and cut its full-year forecast for new car sales to 1.6 million from 1.72 million. That equates to a 2.8% drop in sales from 2021 and would make 2022 the toughest year for the industry in three decades. There have been around 2 million fewer car registrations since the start of the pandemic, equivalent to an entire year of sales.

The SMMT also lowered its sales forecast for next year to 1.89 million from 2.02 million. However, the demand for electric cars continues to grow and plug-in cars are expected to reach a market share of 22.6% this year, rising to 27.8% next year.

The lobby group expects global chip shortages to begin to ease over the next few months, although it will be some time before supply returns to normal. Shortages will probably still be a problem next year, but to a lesser extent.

Chipmakers have invested in additional production capacity in the face of much more severe shortages than expected.

July was a tougher month for electric cars. UK battery-powered electric vehicle (EV) sales rose 9.9% to 12,243 and accounted for 10.9% of total car sales for the month. Although this is the lowest monthly increase in electric car sales since the pandemic, overall growth so far this year has reached 49.9%, representing a market share of 13.9%, illustrating supply chain volatility.

It was also a weaker month for hybrid electric vehicles, with registrations down 6.7% to take 12.2% of the market. Plug-in hybrids fell by 34%, reducing their market share to 5.8%.

Ian Plummer, commercial director at Auto Trader, said demand for new cars was much higher than suggested figures and supply chain issues had “hidden” the true level.

“The market issue is still one of supply, as the war in Ukraine and component shortages limit new vehicles despite a long queue of potential buyers,” Plummer said. “Retailers still have order books going back months that they cannot yet fulfill, despite manufacturers’ best efforts.”

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He said concerns over high fuel costs and the cost of living crisis were pushing drivers towards electric vehicles, particularly when it cost nearly £100 for a tank of petrol while recharging a car electricity at home cost one-fifth.

“With fuel prices as high as they are, electric vehicle owners are now saving £165 for every 1,000 miles driven. The savings are such that demand for electric vehicles exceeds actual sales. About one in four new cars seen on our site is an electric vehicle, but they only account for one in seven of all new sales,” Plummer said.

“Closing this gap could unlock the reach of electric vehicles in the mass market – but for that to happen, concerns about the cost of new electric vehicles compared to traditional vehicles will need to be addressed, as well as the market capacity of the vehicle. opportunity to meet the demand for more affordable used electric vehicles.