Sales of new cars slumped by more than a fifth last month to their lowest August level in eight years as the global shortage of semiconductors continued to hurt production across the automotive industry.
The Society of Motor Manufacturers and Traders (SMMT) said that just over 68,000 new cars were registered in the UK in August, a 22% fall compared with the same month last year.
While demand in August is typically weaker, with many buyers holding off for the new number plate change in September, the SMMT said the chip shortage was affecting vehicle production.
“While August is normally one of the quietest months for UK new car registrations, these figures are still disappointing, albeit not surprising,” said Mike Hawes, the chief executive of the SMMT. “The global shortage of semiconductors has affected UK, and indeed global, car production volumes, so new car registrations will inevitably be undermined.”
The SMMT said that while the chip shortage was the main culprit affecting the sales slowdown, production had also been hurt by the “pingdemic”, with workers being forced to self-isolate after receiving app alerts that they had been in contact with someone who tested positive for the coronavirus. The industry body expects the supply chain, production and depressed sales of vehicles problems to continue well into next year.
The SMMT said that during the first eight months of the year, sales were up 20% compared with 2020, when dealers and factories were closed for months, but still 25% below average pre-pandemic sales levels.
While sales of petrol cars slumped 40% in August, and diesel vehicles purchases fell by 64% year on year, the popularity of hybrid and electric continues to grow. Sales of battery electric vehicles climbed by almost a third year on year in August, hybrid car sales rose 46% and plug-in electric vehicles purchases jumped by 72%.
Hawes called on the government to continue with support measures to help the embattled British automotive industry, which is struggling to recover.
“Government can help by continuing the supportive Covid measures in place currently, especially the furlough scheme, which has proved invaluable to so many businesses,” he said.
The slump in August follows a 29.5% year-on-year fall in sales in July, the weakest level of sales for that month since 1998.
Demand could also have been affected by more people shifting to hybrid working patterns, and the dip in UK consumer confidence in August.
Last August, car dealers reported a sales boost after reopening after the first coronavirus lockdown. However, this year supply chain problems are affecting output, with production in June slumping to the lowest level in almost 70 years for that month.
Last month, Volkswagen and Toyota warned of production cuts because of the global shortage in semiconductors. Last week, Volvo said that sales could fall in the second half of this year after it was forced to cut production because of shortages of materials.
The difficulty buyers face in getting their hands on new vehicles has proved to be a boon for the secondhand car market, with demand hitting all-time highs.
“Many buyers who would typically buy new are being driven away by long wait times,” said Alex Buttle, a director at Motorway.co.uk. “The used car market is perfectly positioned to take advantage of the frustration buyers are feeling. Demand for used cars is at an all-time high, pushing up prices significantly.”