David Borland, EY UK & Ireland Automotive Leader, comments on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures for April 2023:
“The UK automotive industry continued its recovery path in April with just under 133,000 new registrations, an 11.6% increase compared to 2022, marking the ninth consecutive month of growth.
“Supply also continues to improve with a 6% production increase in Q1 2023, amounting to almost 220,000 units in the first quarter, providing the industry with a further boost. The primary driver for these growth figures in April was a 33% increase in fleet and a 59% increase in battery electric sales compared to last year. For supply, there was a 75% year-on-year increase in production in March for a combination of hybrid, plug-in hybrid and battery electric vehicles.
“The direction of travel on the rise of alternative fuel vehicles is clear, but short-term plug-in vehicle demand will continue to contend with insufficient charging infrastructure and changes in the total cost of ownership for battery electric vehicles driven by high energy costs. For infrastructure, there was recently a welcome announcement that 18 charging network providers are creating a trade association - a clear recognition that a more joined-up approach is necessary to serve the needs of a fast-paced transition.”
Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, adds:
“Car factories globally have been constrained by the lack of availability of semi-conductors since mid-2020. However, according to announcements from Original Equipment Manufacturers (OEMs) and commentary from industry analysts, this long-term shortage is beginning to recede, with some even predicting an inventory surplus for OEMs as they adjust to the renewed supply of components, less volatile costs and revised pricing strategies.
“Another positive factor to note was the latest Q1 earnings for OEMs and dealers, which in many instances exceeded expectations and previously issued guidance. This positive and stable start to the year creates solid foundations for the remainder of 2023.”
“The UK car industry continues to transition to a zero emissions future, accelerated by new regulation targets and Net Zero plans that in parallel create new opportunities and sources of value to be tapped into.
“Operationally, the challenges experienced through the pandemic are reducing, with supply chains stabilising and a return to a supply-led market.
“To ensure the industry remains resilient and thrives in the future, it will be vital to secure further public and private investment, build partnerships to de-risk capital exposure and increase speed to market.”