Weakest new number plate sales for March since 1998 but electric car sales enjoy record surge

The car industry has reported the weakest sales for the new number plate month of March since 1998 as it continues to battle a global chip shortage that has hampered production.

The Society of Motor Manufacturers and Traders (SMMT) said the figures for March – traditionally the strongest month for new car sales because of the number plate change – were 14.3% down on the same month last year.

A total of 243,479 vehicles left showrooms, the body reported, saying it did not reflect low demand for ’22 registrations but the COVID crisis-linked supply chain shortages that have hit production of – and therefore deliveries of – new cars.

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The SMMT said: “Given around 20% of total annual registrations are usually recorded in March, the result is massively disappointing for the sector and underscores the long-term impact the pandemic is wreaking on the industry”.

One bright spot continued to be sales of new battery electric vehicles, which were up by almost 79% on last year to hit a March record of 39,315 units.

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That figure exceeded the total for battery electric vehicles during 2019 as a whole, the SMMT added as it continues to gear up for the looming ban on the sale of new petrol and diesel-powered cars from 2030.

It said that with fuel prices at record highs – and despite the cost of electricity shooting up – it made sense for families to make the switch to a greener vehicle.

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SMMT chief executive Mike Hawes said of the overall March sales figures: “While demand remains robust, this decline illustrates the severity of the global semiconductor shortage, as manufacturers strive to deliver the latest, lowest emission vehicles to eagerly awaiting customers.

“Placing orders now will be beneficial for those looking to take advantage of incentives and lower running costs for electric vehicles, especially as the Ukraine crisis could affect supply still further.

“With increasing household and business costs, government must do all it can to support consumers so that the growth of electric vehicles can be sustained and the UK’s ambitious net zero timetable delivered.”

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Chip shortage impact to be felt throughout 2022, SMMT warns

While the SMMT has already warned that the semiconductor shortages will last beyond 2022, there are growing fears that the scale of pandemic disruption in China will only make matters worse.

Richard Peberdy, UK head of automotive at business services firm KPMG, said: “The implications of war in Ukraine and heightened restrictions in China add further complexity and exacerbate this challenge.

“Whilst supply shortages persist, production volumes will remain lower than pre-pandemic, and car makers will continue to focus on higher margin models, as well as the electric vehicles market.

“Up until now, this has kept forecourt sales relatively healthy, and also driven up prices of used cars.

“But the rising cost of living poses significant questions about whether consumers will delay, or even curtail, larger investments, such as on a car. The coming months will tell.”