Cox Automotive says ongoing supply issues have led it to downgrade its new car sales forecast for 2021.
The automotive service organisation predicts there will be 1,823,426 new car transactions – a drop of 2.48 per cent, or 46,349, against its April forecast and more than a fifth (21.1 per cent) less versus the 2000-2019 pre-pandemic average.
Meanwhile, it reckons the third quarter will end 17.7 per cent down on the 2000-2019 average at 522,425 transactions.
It says the scenario assumes that the summer will see modest demand maintained but the same supply issues currently being experienced will continue.
Cox said global car supply had dropped significantly because manufacturers were trying to adjust to new working methods as well as mend broken supply chains and find the materials needed for new car production.
SMMT figures published earlier in July showed that new car registrations fell by 16.4 per cent in June versus an average pre-pandemic June.
Writing in Cox’s latest quarterly edition of AutoFocus, which was published today (Jul 20), Cox Automotive insight and strategy director Philip Nothard said: ‘We’re witnessing a perfect storm for the automotive industry.
‘Most in the industry know about the shortages in semiconductors, aluminium price rises and rubber and plastics shortages.
‘But additional issues such as manufacturers shifting their R&D and manufacturing capabilities towards EVs, and the implications of the Brexit transition period and delays are less discussed.
‘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.’
He pointed out: ‘Arguably, the used car market has never had this much influence on the industry as a whole.
‘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. But this can only go on for so long, as supply isn’t there to meet demand.’
Nothard added: ‘We don’t expect new car supply shortages to be resolved until H1 2022, so the knock-on effects in the used car market will be around for some time yet.
‘However, while trade price realignments are expected, we are unlikely to see a flood of vehicles into the used market, so the prospect of a significant drop in values is small.’
But he warned that the industry should take care that it doesn’t become a bubble, adding that it should keep its fingers crossed that the country stays restriction-free come autumn ‘and that the economy bounces back as support programmes are removed’.