Car sales fell for a fifth month in a row in July, while new engine registrations fell 9 percent, official data showed.
Some 112,162 passenger cars hit UK roads last month as manufacturers struggled to keep up with orders due to a shortage of the semiconductor chips needed to power the new cars.
The Society of Motor Manufacturers and Traders said the fall in year-on-year sales was the smallest on record in 2022, although industry insiders say it will be worse as a result of escalating cost of living.
Auto sales continue to decline, with around 112,162 vehicles – down 9% from July 2021 – registered in July as manufacturers struggled to fill orders due to a shortage of semiconductor chips
The car trade body also blamed the Covid-19 lockdown of key manufacturing and logistics centers in China and a parts supply disruption linked to the war in Ukraine as additional factors that have limited production and supply of new cars to the UK.
The decline in July sales adds to an already poor half-year for car registrations, which the SMMT said “proved more challenging than expected due to the continued severity and impact of semiconductor shortages and global conflict.”
Mike Hawes, chief executive of SMMT, said: “The automotive sector has endured another difficult month and is building on its fundamental resilience for a third consecutive challenging year with supply pressures hampering deliveries.
“While the order portfolio is strong, we need a healthy market to ensure the sector delivers the carbon savings the government is demanding.
“The next Prime Minister must create the conditions for economic growth, restore consumer confidence and support the transition to zero-emission mobility.”
SMMT said the fall in year-on-year sales was the smallest on record in 2022, although industry insiders say it will be worse as a result of escalating living costs
While Mr Hawes expects supply problems to begin to ease in the second half of 2022, the industry body says it is unlikely the market will be able to recover from the significant losses suffered so far.
That looks increasingly unlikely as Britain is already embroiled in a cost-of-living crisis that will worsen in the coming months as inflation and energy prices are forecast to rise.
“Manufacturing problems, the cost of living crisis and rising energy bills are holding back consumer spending, with many turning to alternatives such as the used car market and many putting off buying a car altogether,” explains Lisa Watson. , Sales Director at Close Brothers Motor Finance.
“The impact on sales is still being felt across Europe, with the European Automobile Manufacturers Association announcing that EU passenger car sales in June fell to the lowest figures since June 1996.”
Analysts say rising energy prices will not only dampen consumer spending by the end of the year, but carmakers may also raise prices on their models.
Still, analysts say demand for new cars is still very high, with thousands of motorists putting their names on order books and waiting for their cars to arrive.
Richard Peberdy, KPMG’s UK head of motoring, said: “Despite the cost of living crisis, demand for new cars in the UK continues to outstrip supply, with many models facing a long wait.
“But rising energy costs will further test consumers’ ability to purchase new cars in the remaining months of the year, including appetite for electric car adoption. The cost of production is also likely to rise further, along with prices.”
With a semiconductor shortage limiting supply, What Car? says customers will cancel orders if the dealer can’t guarantee their new model will arrive within a year or so of placing the order
Jim Holder, editorial director of What Car?, said that while drivers are happy to wait weeks or even months for a new car to arrive, most are likely to cancel their orders if they are told a lead time of more than a year .
“While most carmakers continue to make big profits against this backdrop, global semiconductor shortages and rising production costs mean customers are suffering both in terms of waiting times and rapidly rising costs. It’s unclear how long their patience will last,” Mr. Holder said.
“Our own research shows that consumers are willing to wait, but not excessively so, with less than 5 per cent of new car buyers saying they are happy to wait more than 12 months for a new car to arrive – the quoted delivery time for many new models at the moment.
“If wait times can’t be met, buyers tell us they’ll either switch to the used or near-new market or look to other manufacturers in the hope of finding a car with a shorter wait.”
He adds: “The coming months will be critical for the auto sector as the full extent of supply shortages and rising prices emerges.
“Buyers are impatient and manufacturers are severely limited in how they can respond; this impasse risks undermining the health of the UK car industry at a time when it is expected to invest heavily in electrification and carbon-neutral manufacturing.”
Given the challenging first seven months of 2022, the SMMT – not for the first time this year – revised downwards its annual car sales estimate.
With the industry facing its most challenging year in three decades, the trade body cut its forecast to 1.6 million registrations, which would be 2.8 percent less than in 2021, a year affected by national lockdowns. which prevented customers from visiting car showrooms.
The Sunderland-built Nissan Qashqai was the best-selling new car in July. Records show just over 2,500 examples were registered last month
The Oxford-built Mini hatchback was the second most popular new car in July with 2,410 sales
The Vauxhall Corsa continues to lead as Britain’s most popular new car in 2022
Despite the bleak results and outlook for the market going forward, there were some small positives to be taken from July’s numbers.
The sales leaders for the month were British-made cars – the Nissan Qashqai SUV produced in Sunderland (2,514 registrations) and the Mini hatchback (2,410) produced in Oxford.
They have risen to third and fourth place respectively in the overall sales list for 2022, coming in behind the Vauxhall Corsa in first place and ahead of Ford’s Puma.
Electric vehicle sales also continued to grow in July, with 12,243 zero-emission vehicles hitting the roads last month.
This represents more than one in ten (10.9 per cent) new models sold in July, although the 10 per cent increase is the weakest monthly increase recorded in electric vehicle sales since the pandemic.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. This helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow commercial relationships to influence our editorial independence.
Car sales fell for the fifth month in a row
Source link Car sales fell for the fifth month in a row