New car registrations in the UK fell 9.0% to 112,162 units in July, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
The result marks the fifth consecutive month of decline, although the decline is the smallest recorded this year and analysis conducted by GlobalData suggests a slight improvement in the underlying trend. Analysts there say the annualized seasonally adjusted sales rate (SAAR) for the UK new car market was 1.6 million units/year in July, compared to 1.5 units/year in June.
However, the operating speed of the UK car market remains well below pre-pandemic levels (it reached 2.3 million units in 2019).
Ongoing global supply chain problems, mainly the lack of semiconductors, continued to frustrate order fulfillment last month, exacerbated by Covid lockdowns at key manufacturing and logistics centers in China, plus disruption from the war in Ukraine, all of which have affected manufacturing output and thus limited supply in the British new car market.
The decreases were mainly driven by an 18.2% decrease in the number of registrations by large fleets to 50,014 units, while the number of consumer registrations remained stable at 59,847 units. As a result, private registrations in the year so far are 3.7% higher than in 2021 as manufacturers prioritize retail customers.
Battery electric vehicle (BEV) usage grew 9.9% to 12,243 units to hit 10.9% market share for the month. While this is the weakest monthly increase recorded by BEVs since the pandemic, overall growth in the year reached 49.9% to yield 13.9% market share, illustrating supply chain volatility. July was a weaker month for the introduction of hybrid electric vehicles (HEV), with registrations dropping -6.7% and taking 12.2% of the market. Plug-in hybrids (PHEVs) fell by -34.0%, reducing their market share to 5.8%.
The first half of the year has proved more challenging than expected, mainly due to the ongoing severity and impact of the semiconductor shortage.
While the industry expects the second half to improve as supply issues begin to ease, the market is unlikely to be able to recoup the significant losses incurred so far. The full-year outlook has therefore been revised downwards to 1.6 million new car registrations – down 2.8% from 2021, with the industry entering its most challenging year in three decades.
About two million registrations have been lost since Covid, which is basically a loss of registrations of a year. However, the market share of plug-ins will continue to grow to 22.6% as manufacturers prioritize investments in the production of zero-emission vehicles.
The SMMT also said the 2023 outlook has also been revised downwards since the April estimate. Although an improvement from 2022, new car sales are forecast by SMMT to reach 1.89 million next year (from 2.22 million earlier).
Mike Hawes, Chief Executive of SMMT, said: “The automotive sector has had another difficult month and is drawing on its fundamental resilience during a third consecutive challenging year as delivery pressures come under pressure. While order books are strong, “We need a healthy market to ensure the sector achieves the government’s carbon savings ambitions. The next prime minister must create the conditions for economic growth, restore consumer confidence and support the transition to zero-emission mobility.”