CEO Update

August car registrations lay bare impact of supply issues

10 September 2021 #CEO Update

Much has been written about the global shortage of semi-conductors, a situation that looks set to continue well into next year. Given the impact it is having on both UK and global car production as well as the supply chain, a knock-on effect on the new car market was sadly inevitable.

While not the only factor in play, figures released this week by SMMT show that UK new car registrations fell -22.0% in August largely due to the chip shortfall. This is not a problem unique to the UK, however, with major manufacturers across the globe announcing production stoppages and, as a result, new car markets going into reverse. It was no coincidence that the German new car market saw a similar fall in August.

68,033 units were registered in the UK in what is traditionally one of the quietest months of the year ahead of the important plate-change in September, marking the weakest August since 2013, and down -7.6% against the average recorded over the last decade. With the global pandemic having negatively impacted businesses for some 18 months now, this latest COVID-related issue is stretching the sector’s resilience still further.

Specific sectoral support is needed and we are urging Government to continue some of the COVID measures it already has in place yet are due to expire soon, most notably the furlough scheme. Other competitor markets have permanent such arrangements, helping smooth over market and industrial shocks and, whilst the semi-conductor shortage isn’t the only COVID issue affecting business, its impact on our sector is especially severe.

The bright spot in the August registrations was, however, the surge in electrified vehicles, with demand for the latest battery electric, hybrid and plug-in hybrid vehicles up 32.2%, 45.7% and 72.1% respectively. In fact, demand for PHEVs has outpaced BEVs in five of the last six months, given the reduction in the Plug-in Car Grant for BEVs in March.

The importance of these vehicles was underlined at IAA Mobility 2021 in Munich this week, a landmark event in many ways, opened for what is almost certainly the final time by German Chancellor Angela Merkel. SMMT attended the Show for a series of meetings with major companies and investors, sister associations and to support the Department for  International Trade’s delegation.

For car makers the focus was inevitably on electrification, with a number of high-profile new model launches and a tangible buzz in the halls. Yet the inclusion of other products and services, from electric bicycles to flying cars, last mile delivery tricycles and automated and autonomous driver assistance systems, gave a sense of the future, with the car an important piece in a wide array of clean and connected mobility choices.

Actually holding a live, in person trade and consumer motor show is quite a milestone given the restrictions still in place in many countries, but it is hopefully a portent of a brighter, more international future.


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