The automotive industry was forced to downgrade its 2022 production outlook after the number of cars built in April slumped 15.8 per cent.
Data published today by the Society of Motor Manufacturers and Traders (SMMT) revealed the number of new car registrations fell to 119,167 units due to covid-induced semiconductor shortages.
The decline, the data suggests, was driven mainly by a 33.3 per cent decrease in large fleet registrations as a result of manufacturers favouring private consumer demand, which has gone up 5 per cent against the backdrop of the cost-of-living crisis.
Deloitte’s automotive director Jamie Hamilton explained that while consumers’ pockets are inherently squeezed, different spending patterns have emerged.
“A divergence in consumer spending is emerging, those with higher disposable incomes and savings accumulated over lockdown are still able to spend on new vehicles,” he said.
According to KPMG figures, 20 per cent of UK consumers plan on using their savings to buy a car.
While battery-electric vehicles reported a 40.9 per cent increase on 2021 levels and hybrid rose 18.3 per cent, the number of new-plug in went down by a third.
This resulted in electrified vehicles accounting for 27.9 per cent of all new car registrations, down from 34.1 per cent in March.
“The worldwide semiconductor shortage continues to drag down the market, with global geopolitical issues threatening to undermine both supply and demand in the coming months,” commented SMMT’s boss Mike Hawes.
A combination of Covid-induced supply chain issues, rising inflation as well as the impact of the war in Ukraine on fuel and transport costs has forced the SMMT to revise its market outlook for 2022, downgrading it to 1.72 million, down by 170,000 on January’s forecasts.
Supply chain issues remain the industry’s biggest challenge, with analysts believe they will protract well into next year.
“The supply chain issues and component shortages dogging the car industry are now likely to last into the first half of 2023 as the conflict in Ukraine exacerbates post-pandemic disruption for manufacturers,” said Ian Plummer, director at automotive advertising business Auto Trader.
As supply chain issue stunt the market’s growth, used cars continue to thrive for the 25th consecutive month.
According to Auto Trader’s Retail Price Index, the average price of a used car has increased 32.2 per cent on a year-on-year and like-for-like basis in April.
“There’s still robust levels of appetite for both new and used cars in the market,” said Auto Trader’s director of data Richard Walker.
“Add to the fact that the ongoing squeeze in new car supply is likely to be extended, due in part to the current geo-political situation, we’re confident used car prices will remain strong for quite some time to come.”