Component and staff shortages contributed to a 29.5% fall in sales of new cars in July, according to the Society of Motor Manufacturers and Traders (SMMT).
The trade association said the decline was also 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, this July’s new car registrations total of 123,296 units was down 22.3% on the average recorded over the past decade, as an ongoing semiconductor shortage and the “pingdemic” impacted both supply and demand.
As a result, this was the weakest July for new car registrations since 1998, prior to the introduction of the two-plate system.
Diesel sales plummeted 69.5% to 8,783, a market share of 7.1%, and were outsold by battery cars (BEVs) which notched up sales of 11,139 units, a market share of 9.0% and up 35% on the same month a year ago. All types of hybrid vehicles, excluding diesel hybrids, also grew sales and outsold diesels.
Petrol car sales were down 45.5% to 55,250, taking a market share of 44.8%.
The decline in overall sales was predominantly within large fleets which, at 61,140 units, was 28.7% lower than the average recorded over the past decade. Private registrations declined by 10.7% to 59,841 units.
SMMT said it was adjusting its sales forecast for the year downwards, as a result of the weaker market, to around 1.82 million units. This is 11.7% up on 2020, but down from the 1.86 million forecast in April, and down 21.8% on the average new car market recorded over the past decade.
However, given the continued strengthening of the electric vehicle market, SMMT now estimates that BEVs will account for 9.5% of registrations by year end, while petrol hybrids are forecast to comprise 6.5% of the market, collectively totalling around 290,000 units by the end of the year.
SMMT chief executive Mike Hawes said: “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.
“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.
“As a result, we have downgraded the market outlook slightly for 2021. The bright spot, however, remains 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.”
Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA) which represents franchised car and commercial vehicle dealers in the UK, commented: “The 29.5% decrease in new car sales in July can be attributed to significant pent-up demand that was released when dealers reopened this time last year, after the first lockdown.”
“Given the headwind we are witnessing in relation to vehicle supply, as a consequence of semi-conductor shortages and factory closures, franchised dealers continue to perform resiliently.
“It is usual for consumer demand to wain slightly as we approach the important month of September. NFDA members still remain cautiously optimistic in their outlook for the remainder of the year.”