UK News: Car sales stay in reverse for a fifth consecutive month

New car sales further recede in July

 New car sales further recede in July © SP/SKODA Sale of new cars further fell in July Sales of new cars further fell in France in France, 7 % compared to July 2021, with 107,547 registrations. New car sales further fell in July in France, 7 % compared to July 2021, with 107,547 registrations, the platform, which represents the manufacturers. The market is down 15.31 % over the first seven months of the year, with 879,527 registrations, while the year 2021 had already been historically low.

Car sales fell for a fifth consecutive month in July, with registrations of new motors down 9 per cent, official figures show.

Some 112,162 passenger cars entered UK roads last month as manufacturers struggled to meet order volumes due to a lack of semiconductor chips needed to power technology in new vehicles.

The Society of Motor Manufacturers and Traders said the year-on-year sales decline was the smallest recorded in 2022, though industry insiders said worse is set to come as a result of the escalating cost-of-living crunch.

Car sales still in reverse: Some 112,162 cars - 9% fewer than in July 2021 - were registered in July as makers struggled to meet orders due to a lack of semiconductor chips © Provided by This Is Money Car sales still in reverse: Some 112,162 cars - 9% fewer than in July 2021 - were registered in July as makers struggled to meet orders due to a lack of semiconductor chips

The automotive trade body also blamed Covid lockdowns in key manufacturing and logistics centres in China and parts supply disruption linked to the war in Ukraine as additional factors that restricted production output and supply of new cars into the UK.

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July's slip in sales adds to an already-poor half year for car registrations, which the SMMT says 'proved more challenging than anticipated, due to the enduring severity and impact of the semiconductor shortage and global conflict'.

Mike Hawes, SMMT Chief Executive, said: 'The automotive sector has had another tough month and is drawing on its fundamental resilience during a third consecutive challenging year as the squeeze on supply bedevils deliveries.

'While order books are strong, we need a healthy market to ensure the sector delivers the carbon savings government ambitions demand.

'The next Prime Minister must create the conditions for economic growth, restore consumer confidence and support the transition to zero emission mobility.'

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The SMMT said the year-on-year sales decline was the smallest recorded in 2022, though industry insiders said worse is set to come as a result of the escalating cost-of-living crunch © Provided by This Is Money The SMMT said the year-on-year sales decline was the smallest recorded in 2022, though industry insiders said worse is set to come as a result of the escalating cost-of-living crunch

While Mr Hawes expects supply issues to start receding in the second half of 2022, the industry body says it is unlikely that the market will be able to recover the significant losses sustained so far.

This looks increasingly unlikely with Britain already embroiled in a cost-of-living crisis that is set to worsen in the coming months with inflation on the rise and energy prices predicted to go through the roof.

'Production challenges, the cost-of-living crisis and rising energy bills are putting the brakes on consumer spending, with many either turning to alternative options, such as the used market, and many putting off buying a car completely,' explains Lisa Watson, director of sales at Close Brothers Motor Finance.

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'The effect on sales is continuing to be felt across Europe, with the European Automobile Manufacturers’ Association announcing that sales of passenger cars across EU countries in June fell to the lowest numbers since June 1996.'

Analysts say surging energy prices will not just reduce consumer spending for the rest of the year but could also see car manufacturers increase the price of their models © Provided by This Is Money Analysts say surging energy prices will not just reduce consumer spending for the rest of the year but could also see car manufacturers increase the price of their models

However, analysts say demand for new cars is still very high, with thousands of motorists putting their name down in order books and waiting for their vehicles to arrive.


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Richard Peberdy, UK Head of Automotive, KPMG, said: 'Despite the cost of living crisis, UK demand for new cars continues to outpace supply, with long wait times for many models.

'But rising energy costs will further test consumer ability to purchase new cars in the remaining months of the year, including electric vehicle adoption appetite. The cost of manufacture will also likely rise further, along with prices.'

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With semiconductor shortages restricting deliveries, What Car? says customers will cancel orders if a dealer can't guarantee their new model will arrive within a year or placing an order © Provided by This Is Money With semiconductor shortages restricting deliveries, What Car? says customers will cancel orders if a dealer can't guarantee their new model will arrive within a year or placing an order

Jim Holder, editorial director, What Car?, said that while drivers are happy to wait a few weeks or even months for a new car to be delivered, the majority are likely to cancel their orders if they are quoted lead times in excess of a year.

'While the majority of car makers continue to make strong profits against this backdrop, global semiconductor shortages and rising manufacturing costs mean customers are suffering, both in terms of waiting times and rapidly escalating costs. It is not clear how long their patience will last,' Mr Holder said.

'Our own research indicates consumers are willing to wait, but not in excess, with less than 5 per cent of new car buyers stating they’re happy to wait more than 12 months for a new car to arrive – which is the lead time quoted for many new models at the moment.

'When waiting times cannot be met, buyers tell us they will either switch to the used or nearly new market or look at different manufacturers in the hopes of finding a car with a shorter wait.'

He adds: 'The coming months will be crucial to the automotive sector, as the full extent of the supply shortages and rising costs are highlighted.

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'Buyers are impatient, and manufacturers seriously constrained as to how they can respond; this stalemate risks undermining the UK car industry's health at a time it’s expected to be investing heavily into electrification and carbon-neutral manufacturing.'

Taking into account the difficult first seven months of 2022, the SMMT has - not for the first time this year - revised downwards its estimation for annual car sales.

With the industry 'facing its most challenging year for three decades', the trade body has now trimmed the outlook to 1.6 million registrations, which would be 2.8 per cent less than 2021 - a year that was impacted by national lockdowns, preventing customers from being able to visit car dealerships.

Despite the bleak results and future outlook for the market, there were some small positives to take from July figures.

The top best-selling models in the month were British-produced cars - the Sunderland-built Nissan Qashqai SUV (2,514 registrations) and Oxford-made Mini hatchback (2,410).

They have respectively moved up to third and fourth in total 2022 sales charts, sitting behind the Vauxhall Corsa in first and head of Ford's Puma.

July also saw the continuation of rising electric car sales with 12,243 zero-emission vehicles entering the road last month.

That represents more than one in ten (10.9 per cent) new models sold in July, though the 10 per cent rise is the weakest monthly uplift recorded by electric cars since the pandemic.

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