NEW car sales dropped to their lowest March number since 1998 according to the latest figures from the Society of Motor Manufacturers and Traders.
New car sales in March fell by 14.3% compared with March 2021; a time when sales were also feeling the negative effect of showroom closures as a result of COVID-19 restrictions.
Jamie Hamilton, automotive director and head of electric vehicles at Deloitte, said: “This will be disappointing for a month that is traditionally the biggest for new vehicle purchases with the release of new registration plates. We expect more significant sales to be felt in September when the next plate change is due. Many dealers have put in their orders now to build a pipeline of stock in preparation.
“It’s clear that the automotive industry is still recovering from the pandemic, with momentum regularly stalled by supply issues. The sector now faces new economic challenges; most notably with high levels of inflation and a squeeze on the cost of living. Combined, these factors have contributed to a sharp decline in consumer and economic confidence, dampening any underlying pent-up demand for new cars.
“A fall in consumer demand and higher oil and raw material prices are also piling additional pressure on manufacturers at a time when the sector continues to contend with supply chain disruption. In particular, the ongoing semi-conductor shortage remains a major issue for the automotive sector.
“Battery electric (BEV) vehicles grew by 78.7% in March, though plug-in hybrid electric (PHEV) sales fell by -7.5% over the same period. Their combined market share remains strong though, at 22.7%, compared to 13.8% in the same period in 2021.
“The government’s long awaited Electric Vehicle Infrastructure Strategy announced in March adds important momentum to the journey towards an all-electric future and race to net zero. The commitment of reaching 300,000 public chargepoints by 2030 will help alleviate anxiety amongst the one in three UK households who don’t have off-street parking, making access to EVs more equitable in the future.
“The strategy also makes a welcome commitment to working with commercial fleets. Even with a fall of -34.4% of fleet sales in March 2022, they still account for two-fifths of all new car sales in the UK. Supporting their electrification will be key to achieving 2030 targets. In order to avoid any shocks along the way, now is the time for private companies to begin considering their EV transition plans.
“With car manufacturers and others within the private sector also making significant commitments to electric mobility, this strategy begins to remove some of the constraints to continued future growth.”
Meryem Brassington, electrification propositions lead at Lex Autolease added that the latest figures from the SMMT show that the growth in EV take-up continues apace – now accounting for 16% of all new motors bought in the UK.
She added: The continued adoption is essential to provide a good supply of used EVs in the future to ensure the transition to electric is accessible for everyone. The government’s plans for a tenfold increase in electric car charge points by the end of the decade will go a long way to removing charging infrastructure as a perceived and real barrier to adoption of EVs. Delivery on this is critical especially for those drivers and businesses in rural areas where access to charging remains a major barrier to electric vehicle uptake.”
With the industry reporting strong order books, it is the constraints on supply that are preventing the sector from moving into full recovery. The shortage of semiconductors, itself an effect of the pandemic, is affecting the sector globally but longer-term uncertainty remains, with the invasion of Ukraine raising risk to supply chains.
More broadly, however, economic headwinds such as rising energy costs, fuel costs, inflation and a squeeze on household incomes could impact new vehicle demand. With grants for BEVs ongoing until at least next March, however, interest rates still low and electric cars benefiting from lower running costs, there are significant benefits for drivers who can order new vehicles now.
