David Borland, EY UK & Ireland Automotive Leader, comments on SMMT new car registration figures for November 2022:
“November 2022 continued to follow the recent trend with a fourth month of growth compared to 2021. SMMT data showed that almost 143,000 new vehicles were registered in the month, an increase of 23.5%. This was despite a relatively healthy comparator in the month in 2021, but was still almost 9% lower than pre pandemic in 2019. The trilemma of money, energy and supply that all UK businesses are facing continued to impact the UK car industry, as business leaders plan for high inflation scenarios, mitigating specific risks, and execution of strategies to protect revenue and increase margins.
Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, adds:
“Inflation across advanced economies is at its highest rates for decades. In addition, temporary and structural supply constraints are interacting to lengthen cost pressures from supply chains. The final ingredient in this perfect storm is the human resource retention crisis as wage increases created further inflationary spiral adding to current pressures. A generation of automotive leaders who have never dealt with such an acute and sustained crisis are now forced to plan for different scenarios and navigate the business through several years of turmoil. However, automotive dealers, suppliers and OEMs can soften the impact from this winter of discontent by ensuring the right portfolio, competitive pricing and focusing on efficiency.
“Geopolitical and macroeconomic pressures facing the UK economy today shows no signs of abating anytime soon. In addition, the UK’s desire to position itself at the forefront of a new world order in the automotive sector has seen serious setbacks with EV manufacturers leaving the UK for greener pastures abroad.
“However, the UK is not at risk of a complete breakdown. Demand in November saw the highest monthly share of battery electric vehicles at just over 20%. A British luxury carmaker is presently undertaking a multi-billion pound modernization of its factory and a battery manufacturer announced it has secured a short-term investment to stay in business while it explores further avenues for long term funding. The industry however needs to move at a faster pace in order to ensure it is not left behind. The UK government can look global and learn from successful governmental policies in the US, China and the EU that have wooed investors through a combination of grants and collaborative policy making.”