WITH new car sales continuing to fall in April, largely driven by supply side constraints and continued lockdowns in China, the SMMT has revised its market outlook for 2022, with 1.72 million new cars now expected to be registered this year, down from previously forecast 1.89 million
Total new car sales in April fell by 15.8% compared with the same time last year. While fleet sales have been declining, private sales have continued to perform relatively well, up by 5% even against the backdrop of a cost of living crisis.
Jamie Hamilton, Automotive Director and Head of Electric Vehicles at Deloitte, said: “The squeeze on consumer pockets has seen many households delay major purchases in an effort to save money. However, a divergence in consumer spending patterns is emerging; those with higher disposable incomes and savings accumulated over lockdown are still able to spend on new vehicles.
“Although the sector continues to adapt to supply chain challenges – including the ongoing semi-conductor shortage – lead times are less of an issue this month for private sales as many dealers have been able to rely on stock ordered last year.
“The cost of owning a car is rising, perpetuated by record-high fuel prices at the pumps. For those who lease their vehicles, car repayments already make up a major proportion of many consumers’ household bills.
“The automotive sector must brace for a further fall in demand with just 5% of consumers planning to purchase a car this quarter; a fall from 7% in Q4 2021. This decline will have wider-reaching implications for the sector as it could signify an end to the pent-up demand that was built up during the pandemic.”
Despite the ongoing challenges faced by the industry, sales of electric vehicles continue to perform above expectations, with battery electric vehicles sales growing by 11% in April. Combined BEV and PHEV sales have accounted for a fifth – 21% – of all new car purchases in the year so far, compared with 14% in the same period last year.
Hamilton aded: “Some of this growth is directly attributed to a shift in consumer behaviour, with many dealers reporting greater BEV enquiries as the cost of fuel has skyrocketed. With prices unlikely to fall any time soon, we could see faster-than-expected take up of electric vehicles this year.”
Jon Lawes, Managing Director, at Novuna Vehicle Solutions pointed out that it has taken just four months for the UK to register over 75,000 new fully battery powered vehicles in 2022, a milestone that in 2021 wasn’t reached until July, while in 2020 it was as late as October, a full six months later than this year.
He added: “The impressive numbers illustrate how EV manufacturers are, for now at least, largely belying the vehicle shortages which are having a profound impact on the rest of the automotive industry.
“Supply chain issues are causing OEMs to feel the pinch more than ever as they struggle to fulfil increasing orders, on top of a backlog of deliveries. With a protracted shortage of vehicles, it is prudent for drivers and fleet operators to be planning further ahead, increasing their renewal cycle from 6 to 9 months in advance. For leasing companies, there is an onus on providing flexible extension agreements to help alleviate the current situation.”
Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, said thar analysts who had predicted the end of the supply chain crisis by end of 2022 or early 2023, are now revising that forecast, primarily due to the impact of recent geopolitical tensions in Europe.
“High oil prices, reduced availability of key raw materials, transportation challenges caused due to Covid lockdowns in Asia, and shortage of freight carriers has continued to create disruption for automotive manufacturing both in the UK, and globally.”
Meryem Brassington, electrification propositions lead at Lex Autolease said that the UK car market continued to make significant inroads along its electrification journey, with the 77,000 EVs registered to date putting us on track to surpass last year’s annual total.
She added: “Policymakers have played a huge role in encouraging EV manufacturers to bring zero emission vehicles to the UK despite the ongoing supply chain issues, delivering a real boost to our green economy. In order to ensure that the good work continues beyond 2025, balancing demand and supply is now key to achieving the UK’s longer-term ambition.
“The recently launched Zero-Emission Vehicle Mandate policy consultation further cements the UK’s ambition to lead the EV charge and will be vital to help shape the trajectory for an electric future in the years ahead. In addition to this it’s essential that Government provide clarity on company car tax rates, and that any changes remain gradual and proportional until we see cost parity between traditionally and alternatively fuelled vehicles.”
