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UK new car sales sink over chip shortages

·Finance reporter
·2-min read
Car sales Reopened Charles Hurst Usedirect used car dealership on Boucher Road in Belfast as restrictions are eased in Northern Ireland allowing new and used cars sales.
Car sales: Registrations fell by 15.8% to 119,167 units in April, with the industry body blaming global supply chain shortages. Photo: PA

The UK car market is expected to sell 170,000 fewer vehicles this year as the industry grapples a perfect storm of semiconductor shortage and rising living costs.

Around 1.72 million new cars will be registered in 2022, according to the Society of Motor Manufacturers and Traders (SMMT). This is a 9% drop from the forecast of 1.89 million issued in January.

Read more: UK making 100,000 fewer cars due to parts shortage

Although that is still a 4.5% rise on 2021, the SMMT said it highlighted the effect the semiconductor shortage was still having on supply as well as anticipated impacts from rising living costs.

New car registrations fell by 15.8% to 119,167 units in April, in spite of showrooms being open for the entire month, unlike in 2021 when lockdown restrictions were in place until April 12.

The drop was driven primarily by a 33.3% decrease in large fleet registrations.

The industry body has blamed global supply chain shortages, mainly of semiconductors, for hampering new vehicle deliveries.

SMMT chief executive Mike Hawes said: “The worldwide semiconductor shortage continues to drag down the market, with global geopolitical issues threatening to undermine both supply and demand in the coming months.

“Manufacturers are doing everything they can to deliver the latest low and zero emission vehicles, and those considering purchase should look to place their orders now to benefit from incentives, low interest rates and reduced running costs.

Read more: Cost of living crisis: Top tips to save hundreds on car and home insurance

“Accelerating the transformation of the new car market and the carbon savings demanded of road transport in such difficult times requires not just the resolution of supply issues, however, but a broader package of measures that encourages customer demand and addresses obstacles, the biggest of which remains charging anxiety.”

Battery electric vehicle registrations continued to grow with 12,899 of the latest zero emission cars joining UK roads – an increase of 40.9% on the same month last year – and taking a 10.8% market share, up from 6.5% last year.

The SMMT anticipates that plug-in cars such as pure electrics and plug-in hybrids will account for more than a quarter of the new car market by the end of 2022.

Watch: How does inflation affect interest rates?

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