CEO Update

September registrations devastated by chip shortages 

08 October 2021 #CEO Update

September was a desperately disappointing month for the sector with registrations of new cars and vans decreasing by -34.4% and -39.5% respectively. Despite strong demand for new vehicles over recent months, these markets have been stalled by the reduced global availability of semiconductors.

This is not just a UK issue, with September registrations in Germany, France and Spain also falling by double digits. The root cause of this shortage is, of course, Covid with rising infections in some of the major chip-building markets causing factory stoppages, exacerbating an already difficult supply situation.

While our global competitors, including France and Germany, have recently extended employment assistance measures for automotive to help manage the situation, however, the same cannot be said for the UK as the vital furlough scheme came to an end. This has helped thousands of companies and employees over the last eighteen months, as the virus ravaged society, the economy and multiple sectors.

For automotive, however, and some others such as aerospace, the Covid crisis is not over. Indeed, we expect the chip crisis to last well into 2022 and possibly beyond. To ensure our market and manufacturing competitiveness is assured therefore, we need urgent action by policymakers commensurate with that taken in other countries.

In more positive news, September was the best month ever for new battery electric vehicle registrations with an additional 32,721 cars joining UK roads. As consumers are presented with an ever-growing range of zero-emission plug-in models, it is hugely encouraging to see the increase in demand for these new vehicles.

If we are to meet our collective decarbonisation ambitions, however, we need to push faster; we need to ensure all drivers can make the switch – not just those with private driveways or company cars. This requires a continuing commitment to overcome cost barriers and a massive investment in public recharging infrastructure. Chargepoint roll-out must keep pace with the acceleration of plug-in vehicle registrations.

Time is running out to sign up for SMMT’s inaugural Global Trade Conference next week. Starting at 10am on Tuesday 12 October, the event brings together an impressive line-up of speakers including Adrian Hallmark, Chairman and CEO, Bentley Motors, The Rt Hon Emily Thornberry MP, Shadow Secretary of State for International Trade and Mike Freer MP, Minister for Exports, Department for International Trade. SMMT members are eligible for a complimentary ticket, and you can find out more information here.

Finally, SMMT will be holding a webinar on the automotive opportunities in Thailand and Indonesia on Thursday 14 October with speakers from the Department for International Trade and the Indonesia and Thai Boards of Investment. These countries are the two largest automotive markets and producers in South-East Asia, together accounting for 1.3 million sales and producing 2.1 million vehicles in 2020. Both are taking steps towards electrification, particularly in public transport. For more information and to register click here.


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