UK new car sales drop to lowest July level since 1998 amid shortages and ‘pingdemic’

Rising demand for electrified vehicles offers bright spot for country's automotive sector

New Honda cars in Southampton. A total of 123,296 new cars were registered in the UK last month. PA

British new car sales plunged 29.5 per cent in July in the industry’s weakest performance since 1998 as supply shortages and the ‘pingdemic’ of people self-isolating hit demand.

A total of 123,296 new cars were registered last month compared to 186,128 in June, according to the Society of Motor Manufacturers and Traders, which marginally downgraded its full-year forecast to 1.82 million cars.

“The automotive sector continues to battle against shortages of semiconductors and staff, which is throttling our ability to translate a strengthening economic outlook into a full recovery,” said Mike Hawes, chief executive of SMMT.

“The next few weeks will see changes to self-isolation policies which will hopefully help those companies across the industry dealing with staff absences, but the semiconductor shortage is likely to remain an issue until at least the rest of the year.”

Britain's automotive sector was hammered last year after new car sales suffered their biggest fall since the 1940s, as Covid-enforced showroom closures took their toll on the motor industry.

New car registrations fell to 1.63 million in 2020, a decline of 29 per cent on 2019 and the biggest annual percentage drop since the Second World War.

While July was boosted by being the first full month dealerships were open across the UK after the initial lockdown, sales were hit by a lack of semi-conductors and people having to self-isolate due to catching coronavirus or being in contact with someone who had.

Last month, the SMMT asked the British government to exempt vaccinated workers at car plants from having to stay at home after being “pinged” by the National Health Service’s Covid-19 tracing app amid a new wave of infections. The trade group’s appeal follows multiple reports warning of the potential for severe blows to the economy just after the government lifted pandemic restrictions in July 19.

SMMT said the July decline was artificially heightened by comparison with the same month last year, when registrations rose dramatically as showrooms enjoyed a full month’s operation following the first 2020 lockdown, however last month's performance was down 22.3 per cent on the average recorded over the past decade.

One bright spot for the sector, Mr Hawes said, was the increasing demand for electrified vehicles “as consumers respond in ever greater numbers to these new technologies, driven by increased product choice, fiscal and financial incentives and an enjoyable driving experience”.

Plug-in vehicles recorded bumper growth with battery electric vehicles (BEVs) accounting for 9 per cent of registrations, while plug-in hybrids (PHEVs) reached 8 per cent.

In June, the Tesla Model 3 was Britain’s best-selling car model, as drivers shifted towards electric and hybrid vehicles ahead of a ban on petrol and diesel cars.

While the pure-electric car comfortably led the top 10 sales chart, with 5,468 new models registered last month, it did not register in July’s top 10.

However, given the continued strengthening of the electric vehicle market, SMMT said it expects BEVs to account for 9.5 per cent of registrations by the end of the year, while PHEVs are set to comprise 6.5 per cent of the market, collectively totalling around 290,000 units by the end of the year.