New car sales in September fall to lowest level in two decades

Sales of new cars in the UK have fallen to their lowest level in more than two decades, as global semiconductor shortages continue to bite, according to the latest figures from the industry’s trade body.

Registrations fell almost 35 per cent in September, according to data released on Tuesday by the Society of Motor Manufacturers and Traders. September is typically the second busiest month of the year for the industry because of the second annual number plate change.

Dealers reported 215,312 new vehicles registrations last month, 34 per cent down on September last year — when sales were also hit hard by the coronavirus lockdown — and an almost 45 per drop on the pre-pandemic 10-year average. The sales figure is the lowest since the “two-plate” system was introduced in 1999.

Like other sectors, the auto industry, which was already faced with uncertainty around Brexit, was hit hard by pandemic shutdowns and economic uncertainty.

It has continued to struggle to meet pent-up demand as the economy reopened due to a global shortage of computer chips.

“This is a desperately disappointing September and further evidence of the ongoing impact of the Covid pandemic on the sector. Despite strong demand for new vehicles over the summer, three successive months have been hit by stalled supply due to reduced semiconductor availability, especially from Asia,” said Mike Hawes, SMMT chief executive.

Richard Peberdy, UK head of automotive at KPMG, said the figures was likely to “disappoint for a plate-change month that typically sees a noticeable boost in new car registrations”. 

He added that the supply chain shortages and a hangover of some Covid-related production problems were compounded by inflation in parts of the economy that was “also spooking motorists and businesses into tightening spending”.

Melrose Industries, the FTSE 100 engineering group, warned on Tuesday that continuing supply chain problems were hurting its automotive and powder metallurgy businesses, with customers cancelling orders at 25 times the rate seen earlier this year.

The company, whose GKN subsidiary supplies parts to carmakers such as Volkswagen, said the “in-month” cancellation from automotive customers had risen to between 20 and 25 per cent from the usual 1 per cent rate seen during the period from January to March.

“Tightened supply of semiconductors to the automotive industry are frustrating and difficult to plan for, but whilst they affect current trading, they don’t impact long-term value, particularly as cash is well controlled and debt reduced,” said chief executive Simon Peckham.

Despite the overall fall in car registrations, the SMMT said more than 32,000 new battery electric cars were registered last month — a new record. Hawes, however, cautioned that a huge investment in public recharging facilities was needed to keep pace with consumer demand.

“Chargepoint rollout must keep pace with the acceleration in plug-in vehicle registrations,” he said.

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