Fewer new cars than forecast are set to hit British roads for the remainder of 2021 as semiconductor supply issues continue to hit production.
Analyst Cox Automotive says this latest quarter is set to be down almost 18 percent on the 20-year average for new car registrations.
For the full year, it’s set to be even worse, with the latest downward adjustment to 1.823 million cars representing a 21.1 percent reduction on the pre-Covid 20-year average.
Last month alone, SMMT figures showed new car registrations were down 16.4 percent on 2019.
This is despite pent-up demand seeing buyers clamouring for new cars – a situation Cox Automotive director Philip Nothard describes as “a perfect storm”.
“To get around the challenges and the reliance of technology in vehicles today, manufacturers are refocusing the available materials towards their most popular and profitable models for the time being – EVs, hybrids and higher-margin vehicles such as SUVs and even their commercial vehicle divisions where there is increased demand.”
The losers? Cheaper, less profitable models, and smaller city cars – which is where new car buyers may therefore find particularly acute shortages.
From new to used
It is the used car sector that is benefitting from the challenges faced by new car buyers. “Arguably, the used car market has never had this much influence on the industry as a whole,” said Nothard.
“Buyers are flocking towards used cars with money to splash after a largely inactive year, and dealers are enjoying an uplift in activity as a result.”
And as new car shortages are generally not expected to be resolved until the first half of 2022, “the knock-on effects in the used car market will be around for some time yet”.
But while used car prices have been continuing to rise in 2021, Nothard says there will be a limit.
“Used car prices rises can only rise so far until the situation is unsustainable.”
Based on latest figures from Auto Trader, however, it is not yet likely that we have reached that limit…
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