Surprise change of direction for new car sales but road remains bumpy: full reaction

Five consecutive months of decline in the new car market came to a halt last month, new industry figures have revealed, though the road ahead looks bumpy amid the cost-of-living squeeze.

Registrations of new cars crawled ahead 1.2 per cent last month compared with August 2021, according to the Society of Motor Manufacturers and Traders (SMMT). Across the UK there were 68,858 new cars registered, marking the first monthly growth since February.

However, sales of new cars during the year so far are 35.3 per cent down on the same period in the pre-pandemic year of 2019.

August is traditionally one of the quietest months of the year for the industry as many buyers choose to wait for new number plates to be released in September. The other plate change month is March.

The uptake of pure electric new cars is slowing, according to the latest data. Year-to-date registrations are up 48.8 per cent, compared with a 101.9 per cent surge at the end of March.

John Wilmot, chief executive of car leasing comparison website LeaseLoco, said: “A small uptick in new car registrations in August provides some respite after five months of declining sales. But it could be the calm before the storm.

“Electric car sales continue to provide a sliver of light at the end of the tunnel. But production issues remain, and consumers are grappling with a cost of living crisis which is likely to get worse before it gets better, with energy bills expected to soar over the winter months.

“The road ahead is going to be a bumpy one, with weakening buyer demand against the backdrop of high inflation and rising interest rates.”

Electric cars have been one of the standout success stories sales wise in recent months. Picture: Peter Devlin

Ian Plummer, commercial director at Auto Trader, said: “The volume of new car enquiries on our marketplace remains comfortably above pre-pandemic levels because for the vast majority, driving is not discretionary even in this climate of soaring inflation.

“The SMMT’s sales figures highlight just how much the industry’s ongoing supply challenges remain the key factor holding back the market.”

Richard Peberdy, UK head of automotive at professional services giant KPMG, said: “A slight easing of global supply shortages is leading to a welcome increase in UK car production and new car sales. But a rising cost of living threatens consumer appetite, whilst rising energy and other inflationary costs are putting pricing under pressure.

“The remainder of 2022 is set to further challenge the UK car industry, despite the welcome easing of component availability.”

Jon Lawes, managing director, Novuna Vehicle Solutions, added: “Despite the new Conservative leader’s daunting in-tray, it is crucial we see firm, swift action to support the automotive sector across the board including further significant public charging infrastructure investment and incentives for drivers to ramp up the transition to zero emission mobility by 2030.

“We would urge the incoming leadership to maintain favourable tax incentives that have been successful in boosting EV [electric vehicle] uptake to date, such as salary sacrifice, whilst devoting significant resource to improving the charging infrastructure, which remains a barrier for millions of motorists looking to transition to an EV with confidence.”