Press release

4 Feb 2022 London, GB

SMMT new car registrations: New Year, same challenges

“The headlines for the first month of 2022 look to have brought some new year cheer, but all may not be as positive as it first appears. There were 115,087 new car sales in January, which was a significant increase of 27% compared to 2021, but it was an equally significant decrease of almost 23% from pre-pandemic January 2020. Within this, the struggles from last year have not abated with manufacturers managing record levels of unfulfilled back orders while the semi-conductor shortage continues to create significant challenges for the sector.

Press contact
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 Advanced Manufacturing

David Borland, EY UK & Ireland Automotive Leader, comments on SMMT new car registration figures for January 2022:

“The headlines for the first month of 2022 look to have brought some new year cheer, but all may not be as positive as it first appears. There were 115,087 new car sales in January, which was a significant increase of 27% compared to 2021, but it was an equally significant decrease of almost 23% from pre-pandemic January 2020. Within this, the struggles from last year have not abated with manufacturers managing record levels of unfulfilled back orders while the semi-conductor shortage continues to create significant challenges for the sector.

Shortfall in New Car Manufacturing leading to Record Back Orders

“Last year, domestic car manufacturers struggled with record levels of unfulfilled new car orders as UK car production touched a new low at almost 860,000 units. This was its lowest level since 1956, as the shortage of semiconductor chips piled further pressure on the industry already reeling from the pandemic. Unsurprisingly, there was a similar decline in UK engine production which dropped by almost 11% in 2021 to just over 1.6 million units. There were two silver linings in the production numbers, an 11% increase in commercial vehicle production, buoyed by the uptick in consumer online spending and home deliveries. Battery electric vehicles also recorded significant growth of 72% in line with the transition to a low emissions future.”

New Car Pricing and Discount Structure

Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, adds:

“It’s not just used car prices that have been sky rocketing. New car profits have been rising leading to several automakers recording double digit margins. Variable marketing on new cars – also known as promotions or discounts – used to be approximately 10% of a car’s list price in the pre-pandemic era, has now reduced significantly as automakers are less reliant on them to drive their sales due to limited availability.

Looking forward

“Although supply chain pressures are expected to ease later this year, they will continue to have some effect even into 2023. In addition, manufacturers face a growing challenge from a surge in energy costs of up to 70%, according to the SMMT. On the EV front, sales are expected to continue to achieve record positive growth. However, significant action is required to address the present challenges posed by the country’s charging infrastructure. According to the latest statistics released by the UK government, there are approximately just seven rapid charging devices per 100,000 population. This is one of the decelerators that could slow the transition down, along with inflation pressures and battery price increases.

“There are always positives to consider in the innovative automotive sector, with the rise of vertical integration between manufacturers and battery suppliers alongside acquisitions and new ownership models in retail creating new opportunities to explore.”