Car factory production lineCar factory production line


Expert warns parts crisis could hamper new car production well into next year

  • New car production won’t get back to normal until next year
  • Cox Automotive expert says rubber, aluminium and semi conductor shortages continuing to cause issues
  • New car supply likely to continue to push used car prices up as buyers switch to nearly new

Time 3 months ago

The new car market could face severe issues until 2022 as parts shortages have a knock on effect across the industry.

Cox Automotive’s Philip Nothard has warned that raw material shortages of aluminium and rubber, as well as the well-documented semiconductor crisis, could hamper production well into next year.

In a briefing today, he said the new car production issues will trickle down to the used market – restricting supply of good quality part exchanges even further.

Used car prices have been soaring as many buyers turn to the nearly new market as their new car choices are delayed.

Nothard said the full extent of the new car production issues won’t be truly felt until later this year but is already being seen in registration figures.

He said: ‘We don’t expect the full financial repercussions of the tier one supply chain issues to hit until the fourth quarter of 2021, and they certainly won’t be fully resolved until 2022.

‘New car registrations continue to face challenges because of supply chain constraints. 

‘Although May ended with a +674.1% (156,737) increase compared to 2020 (20,247), this is a misleading picture due to the severity of the first lockdown last year. 

‘The more telling comparison is with May 2000-2019 averages (176,493), which shows the current market as being 11.2 per cent down.’

Nothard said this will continue to drive demand in the used car market where, he reports, first time conversions are above 80 per cent and average sold prices are at pre-pandemic levels of £5,801.

He added: ‘Demand recovered after a sharp dip in the final weeks of May caused by slowing volume availability, highlighting the volatility of the current market. 

‘As throughout the first quarter of 2021, demand is outstripping supply.’

He said the lack of stock is causing many car dealers to ‘readjust’ their stock profiles and focus on retaining profit margins.

This has driven the average age (102.3 months) and mileage (69,011) of wholesaled cars both up nearly five per cent.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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