The UK’s motoring industry continues to suffer decline.

New car registrations slumped to their worst June since 1996. It comes as ongoing component supply issues contribute to the 24.3% drop in sales. Significantly, the cost of living crisis is yet to bite.

June 2022 registrations - UK's lowest since 1996

Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes states that the semiconductor shortages are “stifling the new car market even more than last year’s lockdown”. This month’s results leave the sector 11.9% down year-to-date.

Electric charge

A total of 140,958 new vehicles were registered in June, leaving the YTD figure at 802,079 units; the second-worst first half total since 1992.

Hawes says the “electric vehicle (EV) demand continues to be the one bright spot” However, this growth is not yet enough to offset weak overall volumes, with huge implications for meeting overall carbon reduction targets.

“With motorists facing rising fuel costs, however, the switch to an electric car makes ever more sense and the industry is working hard to improve supply and prioritise deliveries of these new technologies given the savings they can afford drivers.”

Supplying demands

According to the SMMT, supplies are struggling to meet demand, shortages exacerbated by COVID-19 pandemic restrictions in China.

It’s ben recently reported that MG suspended EV sales as it battles to deliver on orders. Ford’s issues caused it to halt sales of its once best-selling Fiesta supermini. VW also halted production due to parts shortages, principally semi-conductors. Nevertheless, carmakers are prioritising EV production.

June 2022 new car registrations data, SMMT

 

As petrol and diesel car sales slumped last month, EV registrations grew 14.6%, reaching a market share of 16.1% (June 2021: 10.7%).

Plug-in hybrid vehicle (PHEV) registrations dipped by 36.5% to 5.5% market share, meanwhile, as hybrid registrations declined by 7.3% but increased their market share from 1.9ppts to 10.6%.

SMMT data showed that plug-in vehicles comprised more than a fifth (21.6%) of new cars joining the road last month.

Uncertain outlook

EVs are being seen as the sector’s saviour. But current registrations are built on a foundation of packed order books. These are currently protecting carmakers and retailers from the growing cost-of-living crisis.

In the longer term, concerns surrounding the affordability of EVs in a fragile economic climate remain.

Today’s registrations results, based on numbers before the economic crisis began to bite, are a worrying signpost.

Ian Plummer, commercial director at Auto Trader, believes the “real culprit” for faltering registrations is lingering disruption to the supply of vehicles rather than a slump in demand.

Fuelling change

Commenting in Fleet News, he says “the latest monthly figures also give a clear indication that the cost-of-living crisis and the looming era of the £2 a litre fuel charge are turning many would-be buyers towards electric vehicles.”

Plummer says that a typical driver can now save £176 per 1,000 miles driven by going electric.

The costs of inflation and the global economic crisis will not be sen for months. This is due mainly to manufacturers and retailers working through “months of backed-up orders caused by shortages of crucial components hampering the supply of new vehicles”.

The situation is only being “worsened by the Ukraine crisis”.