Supply issues behind August UK car market's 22% drop - Just Auto
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Supply issues behind August UK car market’s 22% drop

06 Sep 2021

Electrified vehicle demand surges, but Covid-related chips shortages continued to cause supply issues that undermine the overall market.

Supply issues behind August UK car market’s 22% drop
Ford’s Puma was the best selling model in the depleted August UK new car market

UK new car registrations fell 22.0% in August, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). Some 68,033 units were registered in what is traditionally one of the quietest months of the year for new car registrations ahead of the important plate-change in September.

The monthly performance was the weakest since August 2013, and down -7.6% against the average recorded over the last decade, due in part to constrained supply as the global shortage of semiconductors, an issue born of the pandemic, continues to undermine production volumes.

Demand for battery electric (BEV), hybrid (HEV) and plug-in hybrid (PHEV) vehicles, however, surged, up 32.2%, 45.7% and 72.1% respectively. In fact, demand for PHEVs has outpaced BEVs in five of the last six months since changes to the Plug-in Car Grant, affecting BEVs, were introduced in March.

There are now some 130 plug-in models on the UK market.

Registrations by private, business and fleet buyers all fell by double digits in the month with fleet purchases down -27.5%, a loss of 12,627 units. Private activity held up better, registrations dropping -15.2% to 33,771 units, meaning that just shy of half (49.6%) of all sales in August were driven by private consumers. The mini segment was the only car bodystyle to see growth, up 30.7%, but with just 902 registrations it is a segment prone to greater fluctuations.

So far this year, UK new car registrations remain up 20.3%, to 1,101,302 registrations, an increase of 185,687 units with BEVs and PHEVs at 8.4% and 6.6% market share respectively. However, this performance is measured against the Covid-hit 2020 market, when showrooms were closed for much of the year. Total registrations in thus far in 2021 are 25.3% below the 10 year average for the period January – August, illustrating the ongoing and wide ranging impact of the pandemic on automotive retail.

Mike Hawes, SMMT Chief Executive, said: “While August is normally one of the quietest months for UK new car registrations these figures are still disappointing, albeit not wholly surprising. The global shortage of semiconductors has affected UK, and indeed global, car production volumes so new car registrations will inevitably be undermined. Government can help by continuing the supportive Covid measures in place currently, especially the furlough scheme which has proven invaluable to so many businesses.

“As we enter the important September plate-change month with an ever-increasing range of electrified models and attractive deals, buyers in the market for the new 71 plate can be reassured manufacturers are doing all they can to ensure prompt deliveries.”

Richard Peberdy, UK head of automotive at KPMG, forecasts that September will see another low level of sales due to the chip shortage.

“We’re right in the middle of the supply crisis now, and while August is traditionally a quiet month for new registrations, we will certainly see some unusually low numbers registered on the new ‘71’ plate in September too,” he said.

“Market share for electric vehicles (EV) continues to grow as carmakers prioritise their production and sales will rise further as new models launch this year. But despite creating greater choice for consumers, many motorists will remain priced out until vehicle costs come down further.

“Generally speaking, the financing market is strong with low interest rates and plenty of credit. Manufacturers, retailers and new entrants are pouring more focus into mobility-as-a-service (MaaS) concepts, which are gathering some momentum, though the convenience of MaaS still comes at a price.”