Press release

4 Mar 2021 London, GB

Spring is in the air, but winter blues continue for UK car sales

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

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Senior Manager, Media Relations, Ernst & Young LLP

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Related topics Automotive

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

Winter blues continue

“With the continuation of lockdown restrictions impacting dealers throughout the month of February, it should come as no surprise that new registrations are down significantly, -35.5% compared to January 2020, and the lowest total for the month since 1959. 

“February is typically the lowest month of the year in terms of sales so the impact of the lockdown 3.0 may not be as severe as for other months. However, with current restrictions continuing throughout the whole of March and into April, the usual bumper third month of the year is likely to be significantly impacted as well.  

We are not alone

“As we have seen throughout the last 12 months, depressed sales is not just a UK issue. We have seen similar declines in the EU, with Spain being one of the most challenged markets with a 38.4% reduction from 2020, as it continued to struggle to recover from 2020 year end affects. Germany also recorded a decline of -19%, with France -20.9% and Italy -12.3%. 

Supply chain challenges 

With disruption and friction still being felt in the supply chain for UK manufacturers as new Brexit rules bed in, a truly global industry faces another challenge in the form of a shortage of semiconductors. This is in part due to reduced orders through 2020, and other industries being prioritised over automotive customers across the supply chain. This is expected to have a material effect on production and profits with some manufacturers already attributing significant reductions in earnings to the shortage. It also highlights that the current challenge is more supply than demand led. 

Electrification revolution continues apace

The industry continues to accelerate towards alternative fuels, with more manufacturers announcing plans for electric vehicles and online only sales.  

The shift to eMobility continues to receive support from governments as an enabler to Net-Zero targets, with the Biden administration signing a new bill providing $8bn for organisations that develop products and technology that reduce carbon emissions. The German Federal Ministry of Economy and Energy also announced EUR1.5bn for auto industry transformation.  

Back on home soil, there was no support in the Chancellor’s Budget to support the transition, but the shifts towards electric vehicles continues, with BEVs increasing 40% and PHEVs 52% year-on-year. 

“In collaboration with the European energy industry body Eurelectric, EY recently 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. 

What lies ahead

“The announcements in the Budget confirmed HM Treasury’s continued furlough support for businesses, both large and small, and provides a much-needed lifeline for the economy as we enter the next phase of the pandemic. Despite the latest SMMT predictions that the full year market outlook will be 1.83 million, this is positive for the industry to ensure continuity and limit job losses, but it does delay the distress that may hit some in the industry when the support is removed.  

“Though March is unlikely to hit the historical sales heights experienced pre pandemic, 2021 does offer some glimmers of hope. With the successful vaccination roll out and green shoots of economic confidence emerging, the industry may see year-on-year increases in March for the first time since July 2020, buoyed by the continuation of dealers embracing online orders with click and collect fulfilment and the emergence of new low emission vehicles. It’s been a tough 12 months for all, of that there is no doubt, but the future – while still challenging – offers some hope of a brighter future.”