New car sales further dented by supply shortages but electric motors charge ahead

Car industry leaders have downgraded forecasts for the number of cars likely to be sold this year by 9 per cent as chip shortages continue to drag down the market.

Some 1.72 million new cars will be registered in 2022, according to the latest projections from the Society of Motor Manufacturers and Traders (SMMT). This is down from the forecast of 1.89 million issued in January.

The reduction comes as the number of new cars registered in April fell by almost 16 per cent, year-on-year.

There were 119,167 new cars registered last month across the UK, down from 141,583 in April 2021. This is despite lockdown restrictions meaning showrooms were closed for the first 11 days of April last year.

SMMT chief executive Mike Hawes said: “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.

“Manufacturers are doing everything they can to deliver the latest low and zero emission vehicles, and those considering purchase should look to place their orders now to benefit from incentives, low interest rates and reduced running costs.

“Accelerating the transformation of the new car market and the carbon savings demanded of road transport in such difficult times requires not just the resolution of supply issues, however, but a broader package of measures that encourages customer demand and addresses obstacles, the biggest of which remains charging anxiety.”

Registrations of pure electric cars bucked the overall trend last month, with a 41 per cent year-on-year increase.

Registrations of pure electric cars bucked the overall trend last month, with a 41 per cent year-on-year increase. Picture: Peter Devlin

The SMMT anticipates that plug-in cars such as pure electrics and plug-in hybrids will account for more than a quarter of the new car market by the end of 2022.

John Wilmot, chief executive of car leasing comparison website LeaseLoco, said: “New car sales are being hampered by a number of factors. Vehicle availability has been a problem for a while, with supply chain issues and the ongoing microchip shortage still unresolved.

“Now, rising inflation has been thrown into the mix. Families are struggling with rising living costs, and that is likely to make them more cautious about purchasing large ticket items like a new car, even if the desire to buy is there.

“Strong EV and plug-in registrations are the one positive amongst the gloom and show clearly where the road to recovery lies,” he added.

Karen Johnson, head of retail and wholesale at Barclays Corporate Banking, said: “Electric is the only area where dealers have something to smile about, as many customers look to take advantage of incentives around the purchase of electric vehicles as part of an effort to manage wider pressures on household budgets.”

Alex Buttle, co-founder of used car marketplace Motorway.co.uk, added: “While new car sales overall continue to disappoint, once again it’s EVs that are providing the silver lining to the dark cloud that is hanging over the new car industry.

“Encouragingly, we are beginning to see this rising demand for EVs trickling down to the used car market too.”