New car sales crumble, used-models in demand

Given the ongoing impact of supply chain constraints and broader macro-economic factors, SMMT has revised its market outlook for 2022, with 1.72 million new cars new cars now expected to be registered during the year, down from the 1.89 million outlook in January.

While this still represents a 4.5% rise on 2021, it highlights the effect the semiconductor shortage is still having on supply as well as anticipated impacts from rising living costs.

The outlook for plug-in vehicles also was downgraded with the forecast for BEV registrations now at 289,000 units, down from 307,000; and PHEVs at 144,000, down from 163,000. HEVs also saw their outlook fall from198,000 to 193,000.

This means that plug-in electric cars are now expected to account for a quarter of all registrations (25.2%) during the year, with BEVs alone comprising around one in six new cars on the road.

The sector faces further economic headwinds, with rising inflation, not least due to the spiralling energy and fuel costs squeezing household incomes, and further supply chain and other uncertainties arising from the global political situation and the effects of the Russian invasion of Ukraine.

Mike Hawes, SMMT Chief Executive, said, “The worldwide semiconductor shortage continues to drag down the market, with global geopolitical issues threatening to undermine both supply and demand in the coming months.

“Manufacturers are doing everything they can to deliver the latest low and zero emission vehicles, and those considering purchase should look to place their orders now to benefit from incentives, low interest rates and reduced running costs.

“Accelerating the transformation of the new car market and the carbon savings demanded of road transport in such difficult times requires not just the resolution of supply issues, however, but a broader package of measures that encourages customer demand and addresses obstacles, the biggest of which remains charging anxiety.”

“That’s why we’re seeing a steady stream of prospective buyers switch their focus to the second-hand market, and many dealers report that sales of used vehicles are outpacing those of brand new models.

“In the current market, used cars have a clear advantage over their brand new rivals – availability.”

There are signs of a slow recovery, said Seán Kemple, Managing Director at Close Brothers Motor Finance, “Geopolitical issues are affecting the supply of palladium for catalytic converters, nickel for car batteries and a range of auto parts.

“However, while new car registrations have dropped, production has restarted at most car factories, which should result in future growth.

“It’s clear which manufacturers have been less affected by the shortages. Kia is leading the YTD registration figures and Tesla have had success already with its Model Y and 3. This also speaks to the electrification of the car industry, which continues apace. “Almost 40% of models on offer in the UK now come with a plug, with a further 50 due to launch before the end of this year.

“The biggest challenges to adoption are affordability and confidence in the infrastructure and range. The Government, manufacturers and charge point providers need to work together in providing competitive financial incentives to consumers and a better charging infrastructure to drive mass market change.”