David Borland, EY UK & Ireland Automotive Leader, comments on SMMT new car registration figures for February 2022:
“With the country reeling from the impact of three disruptive storms, car registrations in February continued a similar pattern to January with sales showing an improvement over 2021 of 15%, but a significant drop of almost 26% from pre-pandemic February 2020. The 58,994 cars registered in February followed the usual trend of a low volume month, as the market prepares for the ever-important month of March and new registration plates.
Are the Chips still down?
Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, adds:
“Supply chain impacts and the chip shortage has continued – and will continue in the short term – to frustrate the industry. We are in 2021 results season, with many auto manufacturers attributing falling production numbers (UK car production fell 20% in January this year) and high levels of unfulfilled customer orders to the shortage in semi-conductors.
“Despite that, February saw assertive statements from OEMs and automotive suppliers regarding an easing of the crisis. Through a combination of vertical integration and partnerships they have begun to see light at the end of tunnel and manufacturers are expecting a ramp up in production during the second half of 2022.
“Added to this, ongoing geopolitical uncertainties are likely to have an impact on the sector’s manufacturers, supply base, distribution and retail.
Used car sales continue to skyrocket
“According to latest data released by the SMMT, there were 7.5M used car sales in 2021, which was an increase of 11.5% to the previous year. To put into context, this was almost five times new car sales of 1.6M. While the increase may come as no surprise to most, an interesting statistic was a 119% increase in sales of used electric cars, which serves as further proof that consumers are ready for a shift to clean energy. Although petrol is set to remain the most popular fuel choice for used car buyers for the next few years, EVs will steadily overtake them over time as drivers opt for cleaner and cheaper plug-in alternatives.
Electric car sales surge
“The transition to plug in vehicles continues at pace. According to SMMT data, almost 18% of cars registered in February were pure battery, more than double the same month last year. This growth has been driven primarily by a shift in the consumer's attitude towards electric cars and a greater choice of cars to choose from than was previously available. The challenge continues to be the infrastructure, and in a recent study with EY & Eurelectric, we identified the required growth to meet pace with EV adoption, As eMobility accelerates, can utilities move EVs into the fast lane? | EY - Global.
The road ahead
“Although March has traditionally been a key month for automotive sales, March 2022 is expected to follow a similar pattern to the last 18 months. Geopolitical uncertainties, inflation and rising fuel prices are expected to result in a poorer performing month compared to pre pandemic times. However, from a long-term perspective, February had a number of positives for the sector. The UK government announced an end to all COVID restrictions which is very positive news if you are in the business of selling products and services that enable personal mobility. There are tangible signs that the crisis related to the semi-conductor shortage is easing. Also, earnings announcements showed many OEMs & dealers continued to record profits despite the disruption.
“On the EV front, registrations in the UK for cars that run on clean energy continued to surge ahead. And in a positive step for the UK, a Swedish electric car manufacturer announced plans in February to open a new research facility in the Midlands, which is expected to eventually employ more than 800 people. All of the above point to a positive second half for the sector.”