UK new car registrations fell by -15.8% to 119,167 units in April, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), with global supply chain shortages, and most significantly the continued lack of availability of semiconductors continuing to constrain the delivery of new vehicles.
Manufacturers continue to prioritise private consumers which has helped this segment of the market see a modest increase, alongside smaller business vehicle registration (growing by 15.4%), but it is the decline in large fleet registrations (-33.3%) which has had the largest impact on sales.
Demand for BEVs increases
The demand for Battery Electric Vehicles (BEVs) registrations continues its speedy upward trajectory with 12,899 zero emission cars joining UK roads – a massive increase of 40.9% on the same month last year – and taking a 10.8% market share, up from 6.5% last year. With electrified vehicles comprising 27.9% of all new car registrations during April. However, while registrations of Hybrid Electric Vehicles (HEVs) also rose by 18.3%, the number of new Plug-in Hybrid Electric Vehicles (PHEV) decreased by a third as a result, electrified vehicles comprised 27.9% of all new car registrations during April.
Whilst the demand for electric vehicles is very encouraging, and the increased running costs for petrol and diesel, along with grants for BEVs – in place until at least 2023 - will push electric vehicle sales in 2022, the sector faces further economic headwinds, with rising inflation, the squeeze on household incomes, and potential further supply chain issues arising from global political instability and the effects of the Russian invasion of Ukraine.
Forecast downgraded for 2022
Taking these factors into consideration, the 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. Although this still represents a 4.5% rise on 2021, it shows the impact the semiconductor shortage continues to have on supply, alongside rising living costs. The SMMT has also downgraded the forecast for plug-in vehicle sales as a result, suggesting BEV registrations will now reach 289,000 units, down from 307,000; and PHEVs at 144,000, down from 163,000. HEVs also saw their outlook fall from 198,000 to 193,000. Overall, 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 SMMT state that whilst the automotive industry remains supportive of the UK government’s Net Zero ambitions and ending the sale of petrol and diesel cars and vans by 2035, it is reliant on a strong market and, economic and supply issues aside, without the supportive infrastructure to allow every new vehicle owner the opportunity to charge their electric vehicles this will be difficult to achieve.
What can motor traders do?
Mike Hawes, SMMT Chief Executive, advises that whilst supply shortages continue, manufacturers are doing everything they can to deliver the latest low and zero emission vehicles. He goes on to say that those considering purchase should look to place their orders now to benefit from incentives, low interest rates and reduced running costs.
All the above presents a very difficult challenge for motor traders, despite there being huge opportunities particularly when it comes to electrical vehicles. It is clearly a difficult situation to navigate, with demand apparently exceeding supply, external economic influences playing a major part and rising costs and lower consumer confidence all hitting at the same time. It remains more important than ever that businesses have their finger on their own pulse and stay up to date with what is happening both within their own business and outside too. To that, the importance of up-to-date management information, both financial and non-financial, will be key to supporting informed decision making in a timely manner and to enable motor traders to react quickly.
For support and advise with management information for your motor business, please give us a call on 0808 144 5575 or email help@armstrongwatson.co.uk.
