Press release

5 Apr 2022 London, GB

March new car reg data highlights significant challenges for the UK automotive industry

Traditionally, the new plate month of March is the highest volume month of the year, but that has been upended during the pandemic due to lockdowns and supply chain issues. In March 2022, 243,479 registrations were recorded, maintaining slightly lower but similar numbers to 2021 and 2020, but a significant drop from pre-pandemic levels

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Related topics Automotive

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

“Traditionally, the new plate month of March is the highest volume month of the year, but that has been upended during the pandemic due to lockdowns and supply chain issues. In March 2022, 243,479 registrations were recorded, maintaining slightly lower but similar numbers to 2021 and 2020, but a significant drop from pre-pandemic levels. This is the lowest March sales recorded in the UK since 1998 as the car industry continued to struggle with geopolitical uncertainty exacerbating supply chain dislocation, leading to record unfulfilled order books; while used cars continued to fill the void caused due to unavailability of new cars.”

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

“Geopolitical uncertainty is likely to materially impact the automotive supply chain and particularly the availability of semiconductors. Beyond the well-publicised oil price increase, rising prices of automotive raw materials including metals and lithium will continue to create challenges for the industry. Sanctions, mobility constraints and increased cyber security related risks have accelerated the rate of supply chain transformation that the pandemic had set in motion, forcing OEMs to rethink their supplier base, explore opportunities to insource key components and evaluate where they want to do business. 

Spring Budget brings slight relief for automotive manufacturers

“The Chancellor’s Spring Budget brought some encouraging news for auto manufacturers. There was a recognition that overall tax treatment provided for capital investment was less generous than OECD averages. The scope of R&D relief was extended to more qualifying activities (e.g., artificial intelligence, quantum computing and robotics) while vital R&D undertaken by businesses based in the UK will continue to qualify for tax reliefs where there is a "material or regulatory requirement" for this work to be carried out overseas.  Although the measures would be welcome relief to the industry, more assistance from the Government is required to help the fledgling automotive manufacturing sector which according to latest figures released by the SMMT is having a torrid 2022. YTD car manufacturing is around 32% lower than 2021, with February seeing a 41% year-on-year decline.

Electric car sales

“Rising fuel prices and a shift in consumer buying patterns favouring clean energy continue to help the Electric vehicle (EV) sub-sector. According to SMMT data, 127,374 EVs were registered in March 2022, which was a 10% increase over the same period last year. SMMT analysis reveals that more than 140 models of plug-in cars and vans are now on sale, while British factories have produced a quarter of a million electric cars, vans, buses and trucks in the last decade.

“Within the energy transition, balancing the Energy Trilemma  of ‘Green & Clean’, ‘Secure & Reliable’ and ‘Affordable and Available’ has never been such an important priority and will impact the adoption of EVs.

Looking ahead

“The new plate month of March did not give the industry the sales impetus it was used to during the ‘pre-chip shortage’ and ‘pre-pandemic’ era. Also, geopolitical unrest has created a state of uncertainty not dissimilar to the first few months of the pandemic.  EVs and battery manufacturing infrastructure remains the focal point of industry stakeholders. As the UK celebrates the end of its first EV decade in 2022, the initiation of a new blueprint for electric transition is evident as the industry continues its push to make the UK a world leader in zero emission mobility. Also, the Government’s recent EV infrastructure strategy unveiled in March aims to ensure the UK is ‘EV-fit’ by 2030 with over £1.6bn committed towards rolling out charge points nationwide. However, there is a need for governmental support to create conditions conducive to automotive investment including simpler processes for obtaining the necessary regulatory approvals, access to a skilled and productive workforce, and competitively priced clean energy.”