Press release

4 Nov 2021 London, GB

October spells darker nights and gloomier car sales

David Borland, EY UK & Ireland Automotive Leader, comments on SMMT new car registration figures for October

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Related topics Automotive

David Borland, EY UK & Ireland Automotive Leader, comments on SMMT new car registration figures for October:

“With all eyes on Glasgow this week, automotive is one of four areas in focus with “coal, cars, cash, trees” getting the headlines. We wait to see what the impact will be for the automotive industry as negotiations continue at COP26, but it is clear the industry has a vital role to play as we move to a greener and cleaner world.

“Despite the ongoing semi-conductor supply chain issues, some car manufacturers and dealers have been reporting strong performance for Q3. This is from a mixture of product mix and pricing, with some of the premium brands benefiting most.

“As we have now moved into Q4, October sales in the UK were down 24.6% on the prior year with just 106,000 new car registrations, resulting in the weakest October since 1991. This was a similar result compared to pre pandemic times at almost 26% down on October 2019.

Plug in or used?

“As COP26 focuses the world’s mind on transitioning to a low carbon world, low emission vehicles continue to outperform the rest of the sector with increases for BEV and PHEV vehicles of 73% and 7.5% respectively over 2020.This resulted in a combined plug-in share of 22.7% for October. Not quite the 90% share of the EV poster child of Norway, but comparable against the latest estimates of other major EU markets, with France approaching 23%, Germany close to 30% and Italy at 12%. The other point of note is that Diesel continued its decline, with Plug-in vehicles now three times the market share in the month. With much to do, it is clear progress is being made in the UK.

“With limited new car supply, customers continue to turn to used cars. Unsurprisingly, this demand is having a direct impact on pricing, which is now 20% above where it was at the start of the year. This is one of the upsides of the market dynamics we now face.

It’s not just an auto thing

“The well documented supply chain challenges aren’t just affecting automotive. As a customer of the semiconductor suppliers, automotive is not top of the pecking order, but even some of the world’s tech superpowers are reporting lower revenue in the last quarter due to a lack of chips and Covid related disruptions.

“Not many auto manufacturers include clean energy in their product portfolio, but another sign of how the financial market is responding to the transition is Tesla’s market capitalisation breaking through the $1T barrier for the first time. In a capital-intensive industry that is growing ever more connected and complex, access to finance will become more important.

The road ahead

“With the Chancellor’s Budget providing support on new business rates relief for investment in green technologies and an increase in annual investment allowance for capital allowances, there is a recognition of the importance of the sector to the UK economy, employment and wealth creation across the UK. 

“As we move towards net zero targets, there needs to be a continued focus on how the transition is financed, including public and private, for business and consumers.”