New car sales set for weakest year since 1982, says SMMT
Fri, 04 Nov 2022
- New car market on course for toughest year since 1982, warns Society of Motor Manufacturers and Traders (SMMT)
- Ongoing supply chain shortages, surging inflation and the growing cost of living crisis affecting new car sales
- 'Strong' sales in October not enough to 'offset the damage done by the pandemic and subsequent supply shortages'
The Society of Motor Manufacturers and Traders (SMMT) has revised its new car sales prediction for the year down 2.2 per cent to 1.566 million due to ongoing supply chain shortages, surging inflation and the growing cost of living crisis.
This puts 2022 on course to be the market’s toughest year since 1982 when 1,555,027 new car sales were recorded.
The prediction follows the Bank of England increasing interest rates by a record 0.75 percentage points yesterday (3 November 2022), with experts warning that demand for new cars is "cooling".
James Fairclough, CEO of AA Cars, said: "With the Bank of England again raising interest rates, the cost of car finance is increasing just as consumers see their disposable income squeezed by double-digit inflation. The net effect is to make many people reconsider their attitude to big ticket purchases. That’s why many drivers are opting to buy their next car second-hand rather than new."
'Strong' October doesn't offset 'damage' to market
The revised outlook comes despite the UK new car market recording its third successive month of growth in October. Sales rose by more than a quarter (26.4 per cent) to 134,344 units, with hybrid and full electric vehicles driving uplift.
However, the SMMT's chief executive Mike Hawes said that a strong October was "still not enough to offset the damage done by the pandemic and subsequent supply shortages".
The Government's Autumn Statement, due to delivered on 17 November, is seen as an "opportunity to stimulate demand" and the SMMT suggested that "further measures to mitigate energy costs in the longer term for consumers and businesses would give greater confidence".
Looking ahead to 2023, the SMMT believes the market could recover to 1.808 million (still below 2019's 2,311,140 sales) through EV adoption.
Will the market recover in 2023?
Hawes said: "Next year’s outlook shows recovery is possible and EV growth looks set to continue but, to achieve our shared net zero goals, that growth must accelerate and consumers given every reason to invest.
"This means giving them the economic stability and confidence to make the switch, safe in the knowledge they will be able to charge – and charge affordably – when needed. The models are there, with more still to come; so must the public chargepoints.”
Chris Evans, head of sales at online used car marketplace heycar, added: "If the Government and the newly appointed Prime Minister can tackle the huge job of boosting consumer confidence, the market in 2023 should be in a better state than it will be after a difficult end of year.”
How many new cars were sold in October 2022?
New car sales in the UK rose by more than a quarter (26.4 per cent) to 134,344 units in October 2022. This was the third successive month of growth.
However, year to date the UK new car market is down 5.6 per centon the same period in 2021 and still a third below pre-Covid-19 levels.
How many electric cars were sold in October 2022?
Electric vehicle (EV) registrations increased by 23.4 per cent in October 2022 to 19,933 and plug-in hybrids (PHEVs) grew by 6.2 per cent to 8,899.
However, EV uptake grew by less than the overall market for the first time since the Covid-19 pandemic, meaning October is the first month to see EV market share fall year on year since May 2021, mainly due to supply challenges.
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