David Borland, EY UK & Ireland Automotive Leader, comments on today’s SMMT new car registration figures for March:
Taste of Spring
“This week the UK experienced record-breaking heatwaves, freezing temperatures, and then snow across some parts of the country – these extreme conditions reflect the highs and lows of last year perfectly with March marking the one-year anniversary since the UK’s first lockdown.
“Given March 2020 was the first month to be impacted by the pandemic and was -44% vs 2019, it should come as no surprise that this year’s March sales performed better with a year-on-year increase of 11.5% and the first growth since August 2020. This was achieved during another month of lockdown with showrooms remaining closed and this was reflected in the channel mix with fleet growing 28.7% and retail falling 4.1%. However, to put the overall month’s performance into perspective, it was 38% down on the 2019 volume of 458K – providing a truer comparison of how a major auto market like the UK should be performing.
Supply chain & product mix
“Demand continues for new and used cars, but the ongoing issues around semiconductor shortages, causing many plants to halt production, is leading to supply issues. Added to this, many manufacturers around the world are still being impacted by COVID-19 outbreaks – applying further pressure on already suspended production lines as they await parts, choosing which models to produce or retrofitting parts after vehicle assembly.
“The new car electrified market continues to grow with BEVs reporting an increase of 88% & PHEVS up 152%. This resulted in electrified vehicles having a total market share of 13.8% for the month, almost double 2020 the share of 7.3%.
“Used car volumes have remained down year-on-year but pricing reports continue to show year-on-year increases where there is significant growth for alternatively fuelled vehicles, mirroring the trend we are seeing in the new car market for new powertrains.
A view from the EU
“March saw dramatic sales increases across continental Europe year-on-year. Italy grew almost 500%, with France & Spain up 192% & 128% respectively. However, with COVID-19 cases on the rise again across certain European countries resulting in more lockdowns, there is likely to be further impact on sales in April.
Biden American Jobs Plan
“Across the Atlantic, there was a highly significant announcement for the sector from the Biden administration. The American Jobs Plan proposes a $174bn investment that will help position US manufacturers as leaders in the global EV market. The Plan will enable automakers to spur domestic supply chains from raw materials to parts, retool factories to compete globally, and support US workers to make batteries and EVs. From a demand side, it will give consumers point of sale rebates and tax incentives, establish grant and incentive programs for state, local governments and the private sector to build a national network of 500,000 EV chargers by 2030. The plan will also focus on transitioning bus and federal fleets, including the United States Postal Service.
“We believe that a focus on fleets is key to enable the transition to an electrified future, as explained in the study EY recently released with Eurelectric, Accelerating fleet electrification in Europe.
The road ahead
“With the emergence of used car start-ups continuing, significant valuations on scales akin to new EV manufacturer entrants are being seen. This demonstrates the continued disruption in the industry for retailers and manufacturers alike, but also the interest from the capital market.
“With the combination of showrooms reopening in April, test drives restarting, pent up demand, buoyant levels of consumers savings, increasing vaccinations and a very low sales base last year, we expect April to be a bumper month as the recovery continues.”