CEO Update

New vehicle sales stunted by shortages

06 August 2021 #CEO Update

July was a difficult month for the automotive sector as it continues to battle against the global shortage of semiconductors and staff absences given so many have been forced into self-isolating as a result of being pinged. These challenges are throttling the industry’s ability to translate a strengthening economic outlook into a full recovery.

Indeed, the number of new cars registered during the month was down by -29.5% on July 2020 – the first month showrooms across all the UK were open following the first lockdown. With just 123,296 new models entering UK roads it was the weakest July performance this side of the millennium. However, there was some good news with increasing demand for electrified vehicles, which comprised 17.1% of all new cars sold in the month. Consumers are continuing to respond in ever greater numbers to these new technologies, driven by increased product choice, fiscal and financial incentives, and an enjoyable driving experience.

The next few weeks will see changes to self-isolation policies, including no mandatory isolation for fully vaccinated adults who come into contact with someone who has tested positive, which will hopefully help those companies across the industry dealing with staff absences.

However, the semiconductor shortage is likely to remain an issue into 2022. This has forced SMMT to downgrade its new car market forecast for new car registrations from 1.86 million units forecast in April to 1.82 million. This means the market will still be 11.7% up from last year, but down by -21.8% on the average new car market seen over the past decade. On a more positive note, BEVs and PHEVs are estimated to account for more than one in seven registrations by the end of the year.

Commercial vehicles (CVs), meanwhile, also had a disappointing month with 23,606 new vans joining UK roads, a decrease of -14.8% on last year. Even with July’s decline, however, SMMT’s latest quarterly forecast suggests the LCV market will increase by 24.3% in 2021 to 363,880 units. This would be a performance almost back to 2019 levels with the market driven by the shift to home-deliveries and the rising demand from the construction sector.

Elsewhere, there is still time to register for a ticket to the Commercial Vehicle Show which is being held at the NEC, Birmingham, between 31 August and 2 September 2021. The show, which is the largest and most comprehensive road freight transport, distribution and logistics event in Britain, brings together industry visitors from across the country. For CV Show enquiries, including exhibition, please call +44(0) 20 7630 2102 or email Further event information can be found here.

Finally, the government is frequently reviewing and creating various initiatives to support R&D, business growth, low carbon, and business efficiency improvements. SMMT have launched a Funding and Support guide to easily identify available international and regional funding and support schemes, including information on the eligibility, descriptions and contact details is available for each scheme. You can view the guide here.

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