CEO Update

May recovery driven by business confidence

04 June 2021 #CEO Update

With dealerships back open for an entire month, a first for this year, and a better economic outlook, May’s registration figures, released today, are as good as could reasonably be expected. Over the course of the month 156,737 new cars were registered for UK roads, an almost eightfold increase over the same month last year. They remain, however, -13.2% down over the 10-year May average. In the year to date 723,845 cars have been registered, and vehicle uptake is in line with the most recent industry outlook of around 1.86 million registrations by the end of the year.

Against the more positive economic backdrop, increased business confidence has driven fleet registrations to grow twice as fast as private purchases in May. Large fleets accounted for 50.7% of all newly registered vehicles. This is great news for the sector and something that needs to be maintained, but which must be translated to private consumer demand as the economy continues to emerge out of the pandemic.

Demand for electrified vehicles, which comprise 13.8% of new car registrations this year, up from 7.2% in 2020, is also helping to encourage people into showrooms. However, for these technologies to surpass their fossil-fuelled equivalents, a long-term strategy for market transition and infrastructure investment is required, alongside a strategy to ensure the UK is a competitive place for alternatively fuelled vehicles – and their parts and components– to be manufactured.

There was also some good news for light commercial vehicles amidst a record-breaking month for van registrations with 157,150 units registered, suggesting that Britain’s increasing reliance on commercial vehicles is a long-term shift rather than a lockdown stopgap. As the nationwide vaccination rollout continues at pace, maintaining business confidence will be essential for the van market.

There is also, however, an environmental impact associated with this increased demand given the market is overwhelmingly diesel-powered. These are the cleanest and most efficient commercial vehicles ever made yet, like passenger cars, they face an end of sale deadline. We must incentivise some 4.6 million van users and operators alike to make the switch to zero-emission capable technologies, a transition which must be allied to a nationwide charging infrastructure that can support the diverse needs of the commercial vehicle sector.

The UK has a strong passenger car and commercial vehicle sector but it, together with its supply chain, must transition to an increasingly electrified agenda if it is to maintain its competitiveness. This will be one of the main topics at SMMT’s Open Forum Digital next week on Tuesday 8 June at 10:00. More than 450 delegates are registered for this must-attend event which will address the key vehicle manufacturing and supply chain issues affecting the sector.

Speakers include Dan Jack, Global Sales and Commercial Director, Trifast Plc, Murray Goodrick, Account Development Director, DHL Supply Chain, Dom Tribe, Automotive Director, Vendigital and Mick Aiers, Purchase Manager, Stellantis. There will also be a panel discussion, Q&A and virtual networking via the Remo platform.

For more information, and to register for the event, please click here.