Chip shortage blamed as new car registrations fall again

EVs and hybrids remain a bright spot as new car industry struggles further in August

Global supply issues have continued to harm the UK’s new car market, with new registrations down by 22 per cent in August.

August is traditionally a quiet month for sales ahead of the September plate change but this year has been worse than usual as manufacturers struggle to get cars to customers amid a shortage of semiconductors used across the industry.

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Figures from the Society of Motor Manufacturers and Traders (SMMT) show that new car registrations in August were down 7.3 per cent on the decade-long average and at their worst levels since August 2013.

A total of 68,033 cars were registered last month, nearly 20,000 fewer than in August 2020. August’s poor peformance follows an even worse July, where registrations were down 30 per cent on the previous July and their worst since 1998.

Despite the overall decline, alternatively fuelled vehicles including EVs and hybrids continued to perform well.

Pure electric car registrations were up 32 per cent on last August, now accounting for 10.9 per cent of the market compared with 6.4 last year. Full hybrid cars were up nearly 46 per cent but plug-in hybrids saw the largest increase, with a rise of 72 per cent compared with August 2020.

Mike Hawes, chief executive of the SMMT,  said: “While August is normally one of the quietest months for UK new car registrations these figures are still disappointing, albeit not wholly surprising. The global shortage of semiconductors has affected UK, and indeed global, car production volumes so new car registrations will inevitably be undermined.”

Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA) said the strong performance of EVs was “encouraging”, adding: “Despite the decrease in new car registrations, franchised vehicle dealers are optimistic about their prospects for the remainder of the year as consumer confidence remains robust, as demonstrated by buoyant sales of used and nearly new cars.

Worse than Covid

Jim Holder, editorial director of What Car?, said the ongoing chip shortage could do more damage to the industry than the Covid pandemic.

He said: “August is typically a quiet month for the industry, as buyers ready themselves for the September plate-change. This August has been further hampered by the ongoing microchip shortage that has already caused vehicle production in the UK to fall below levels not seen since the Suez crisis in 1956.

“The microchip shortage has the potential to surpass Covid with its impact on the industry. With production delays and limitations, the immediate impact for buyers has been delays to new car lead times and a smaller pool of vehicles and trims to choose from. Estimates suggest it won’t be until early 2022 before the supply constraints ease and production levels start to recover. Until then, buyers will have to accept longer waiting times, or consider looking at alternative models or the used market.”

Karen Hilton, Chief Commercial Officer at heycar, predicted the current supply crisis could bring a “paradigm shift” in how manufacturers build their cars and see them adopt the processes used by phone makers and other tech firms.

She said: “To streamline manufacturing - the tech giants of Silicon Valley long ago abandoned offering customers the ability to customise products in anything other than the most minor way.

“And so will it be with cars. Gone will be the ability to endlessly modify a vehicle down to the tiniest bespoke detail. In its place will be models and trims with specs that are fixed and a reduced number of options to add on top.”

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