Press release

4 Feb 2021 London, GB

UK car sales face a bleak mid-winter as lockdown 3.0 leaves January car sales in the doldrums

UK car sales face a bleak mid-winter as lockdown 3.0 leaves January car sales in the doldrums

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Adam Holden

Senior Manager, Media Relations, Ernst & Young LLP

Passionate media relations and public relations professional helping to provide insight and clarity to complex business issues. Husband and father to twin boys, and a golden retriever.

Related topics Automotive

David Borland, EY UK & Ireland Automotive Leader, comments on today’s SMMT new car registration figures for January:

Bleak winter continues

“This January has been the coldest on record since 2010 and a similar chill continues to run through the automotive industry. With the latest lockdown restrictions impacting dealers throughout the whole month of January, it should come as no surprise that new registrations are down significantly, -39.5% compared to January 2020.

Longer-term, pre pandemic trend of falling sales?

“With 2020 being the lowest sales total since 1992 and also the lowest manufacturing output since 1984, it makes grim reading for a sector already under strain. To add to the bleak outlook, it is also worth keeping in perspective that January 2020 performance was not impacted by the pandemic, but sales were still down by 7% on 2019. So, based on a biennial comparison, today’s figures are 44% down on 2019.

“But this is not just a UK issue – a truly global industry faces, in the main, similar challenges. We have seen similar declines in the EU, with Spain being one of the most challenging markets with a 51% reduction from 2020. This was driven by some one-off effects, with consumers bringing forward orders to December to take advantage of a scrappage scheme and the after effect of storm Filomena further denting consumer confidence. Germany also recorded a decline of -31%.

Post Brexit bumps in the road

“The challenging start to the year was certainly on the cards for the sector and will not come as a great surprise to industry executives, particularly given the ongoing impact of the pandemic and the conclusion of the Trade & Cooperation Agreement only being finalised just before Christmas. 

“In the short-term the agreement has provided some much-needed certainty, despite the inevitable shorter-term impacts of border friction, customs delays and supply chain disruptions. But there are longer term issues to contend with on Rules of Origin and how much localised content is needed to prevent tariffs – only time will tell how much disruption these will cause.

Reasons for optimism

“The continued rise and popularity of electric vehicles is the silver lining for the industry, with positive sales helping the UK achieve its net zero targets.

“Battery Electric Vehicles ended last year +185% year-on-year sales, with Plug Hybrid Electric Vehicles registering +91%. If one considers that this performance occurred during a year that was -29% down on overall sales, then this is one aspect of the sector to feel genuinely optimistic about. It’s clear we are seeing significant shifts in the direction of travel for consumers towards electric vehicles and January saw this trend continue with BEVs increasing 54% and PHEVs 28%.

“In collaboration with the European energy industry body Eurelectric, EY this week released its Accelerating fleet electrification in Europe study, which supports this shifting trend towards eMobility. Some of the key findings are the opportunity to accelerate transition in fleets, and the need for businesses to work together across sectors such as automotive, energy, government and investors with consumers at the middle.

The bumpy road ahead

“The market is likely to remain particularly challenging in the short-term, as manufacturers face production and supply chain limitations affecting the manufacture of new vehicles – a particular concern in Q1 of this year as the order banks are being filled for the all-important month of March. 

“Then there is the inevitable end of the furlough scheme which is likely to add a further layer of disruption and challenge – for both the industry and wider economy – affecting industry employees and consumers alike. 

“But there might be some light at the end of the tunnel. With the immediate uncertainty of Brexit now largely behind us, and ACEA forecasting a 10% increase for the year, there is some optimism that 2021 may not be as challenging as the last. Only time will tell.”