Press release

6 May 2022

EY comments on April SMMT new car registration data

Spring fever for the UK car industry as dismal performance continues in April

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Multidisciplinary professional services organisation

  • April saw 119,167 new cars registered which was a 15.8% reduction versus 2021
  • Rising inflation and supply chain issues continued to impact the auto industry leading to falling production and the reduction in sales
  • EV sales offer silver lining

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

“Car registrations in April started the new quarter with declining sales. Close on the heels of an underwhelming March, April saw 119,167 new cars registered which was a 15.8% reduction versus 2021, but a 26% decrease over pre-pandemic 2019. We can discount 2020 as that was the first full month of lockdown when barely any sales happened.

“Rising inflation and supply chain issues continued to impact the auto industry leading to falling production and the reduction in sales. Although used car sales partially filled the supply gap caused due to unavailability of new cars, they were not enough to materially reduce record levels of unfulfilled order banks for new cars.”

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

“Analysts who had predicted the end of the supply chain crisis by end of 2022 or early 2023, are now revising that forecast, primarily due to the impact of recent geopolitical tensions in Europe. High oil prices, reduced availability of key raw materials, transportation challenges caused due to Covid lockdowns in Asia, and shortage of freight carriers has continued to create disruption for automotive manufacturing both in the UK, and globally. Given the continuing impacts, SMMT have also revised the 2022 forecast down from 1.89M to 1.72m.

Q1 results bring cautious optimism

“Q1 results for the automotive industry ranged from moderate to strong for most major players. Automotive OEMs reported results that were consistent with (or in some instances slightly better than) their Q1 profit guidance. UK car manufacturing in Q1 declined -32.4% during the first three months of 2022, with almost 100,000 fewer units made than in the same period last year. With production volumes still constrained by the ongoing global shortage of semiconductors and other components, 207,347 new cars were built during the first quarter, down from 306,558 in pandemic affected Q1 2021. Despite lower volumes and higher commodity & logistics costs, margins were improved from better product mix and higher pricing.

Electric car sales

“Rising fuel prices and a shift in consumer buying patterns favouring clean energy continue to help Electric Vehicle (EV) sales. Almost 20,000 plugin EVs were registered in April 2022 and now breaking the 100K mark at 113K year to date. April also saw several auto makers launch electric vehicle versions of their iconic vehicles. In the UK alone, recent SMMT analysis showed that EV buyers can benefit from a 15-fold increase in choice of model, as well as more than three times the battery range compared with a decade ago. While EVs have become more visible – alongside the gradually increasing presence of charge points – infrastructure has not kept up with demand, and could adversely impact EV sales, with 75% of motorists saying there are not enough public charge points to meet their charging needs.

Forward look

“April followed a similar pattern to March with sales being weighed down by supply chain related concerns, rising prices of components and the energy crisis. Geopolitical uncertainty has continued to create uncertainty and derailed the slow recovery that we had begun to see at the beginning of the year. 

“With the start of the pandemic now over two years ago, we will continue to see the nearly new car pipeline hampered due to the production reductions limiting cars into the market from that time.

“Despite the challenges facing the industry, the steady Q1 financial results demonstrate that the industry has come to terms with this ‘new normal’. In the UK, EVs and battery manufacturing infrastructure continue to dominate conversations as the industry transitions to a future without internal combustion engines. However, the UK automotive industry does require relief on energy costs equivalent to that afforded energy intensive industries and access to low cost and low carbon energy, comparable to European competitors to ensure it can grow and thrive.”