New car registrations in January increased by more than 27 per cent but headwinds are constraining recovery

  • January new car registrations rose by over 27 per cent
  • Rise is compared to same month last year when showrooms were closed, though
  • Market constrained by ongoing pressures including chip shortage
  • Cars with plugs expected to account for almost one in four new car sales by year end

Time 7:42 am, February 4, 2022

New car registrations in January rose by more than a quarter on the same month last year, latest figures show.

Data published by the Society of Motor Manufacturers and Traders (SMMT) this morning (Feb 4) show that 115,087 cars were registered during the month – a rise of 27.5 per cent on the same month last year.

The SMMT countered the positive news by stating January’s 2022’s figure was set against 2021’s numbers, which were affected by showroom closures due to lockdown.

Overall, January 2022 was down by just under 23 per cent on pre-pandemic January 2020.

Sales continue to be restricted by low consumer confidence and the global shortage of computer chips, which is limiting supply, said the organisation.

January’s rise was driven by private buyers, thanks to carmakers prioritising these customers during the new car shortage.

The private market registered 62,300 new cars – up 64.1 per cent year on year, and just 5.6 per cent off pre-pandemic levels.

Large fleet registrations, meanwhile, remained broadly flat with last year at 50,817 units (down 0.4 per cent).

Electrified vehicles continue to bolster the growth, with battery electric (BEV), plug-in hybrid (PHEV) and hybrid (HEV) cars accounting for 71.5 per cent of the uplift in registrations.

Plug-in vehicles enjoyed another bumper month, with 14,433 BEVs and 9,047 PHEVs registered, equal to some 20.4 per cent of the market.

With 13,492 HEVs also registered, almost one in three new cars joining British roads in January was electrified.

The SMMT has also revised its total 2022 new car registrations prediction downwards.

In October 2021, the organisation said 2022 would see 1.96m cars registered. However, this has been altered to 1.897m – still a 15.2 per cent rise on 2021, but down 17.9 per cent on the pre-pandemic 2019.

Within the 1.897m prediction, registrations of BEVs and PHEVs are expected to grow by 61 per cent and 42 per cent respectively, meaning that by the end of the year, almost one in four new cars will come with a plug.

Mike Hawes, SMMT chief executive, said: ‘Given the lockdown-impacted January 2021, this month’s figures were always going to be an improvement, but it is still reassuring to see a strengthening market.

‘Once again, it is electrified vehicles that are driving the growth, despite the ongoing headwinds of chip shortages, rising inflation and the cost-of-living squeeze.

‘2022 is off to a reasonable start, however, and with around 50 new electrified models due for release this year, customers will have an ever greater choice, which can only be good for our shared environmental ambitions.’

Meanwhile, January’s top seller was the Kia Sportage, which notched up 3,458 registrations.

The Korean SUV was followed by the Ford Puma (2,608) and the Kia Niro (2,372).

It’s the first time Kia has topped UK sales charts.

What the industry says

2022 outlook remains precarious

While this year has started off better than last year, the outlook for the UK new car registrations – and thereby the health of the industry – for 2022 remains precarious. A partial recovery from last year’s dire 1.65m new car registrations to a figure predicted to be nearer 2.0m this year is welcome, and reflected by this month’s figures, but it is a far cry from the peak of nearly 2.7m in 2016.

It is clear that numerous issues, led by the semiconductor chip shortage, continue to throttle the industry’s recovery – and, despite the positive trends, potentially hold back an even faster adoption of cleaner, plug-in vehicles as a result of these supply restraints.

Furthermore, it is the customer who is ultimately paying the price, as manufacturers work to improve profit margins on the fewer cars they are selling, in some cases by even removing lower priced variants from sale. Combined with the rising cost of many raw materials, which is also being layered on, prices of new cars are rising rapidly.

Jim Holder, editorial director, What Car?

Demand remains robust for now

For now, demand for both used and new cars remains robust, despite household budgets coming under increasing pressure.

Car makers also face their own cost challenges and the pressure to increase prices is building.

As more of us again begin to commute, albeit with many facing fewer miles and days on the road than pre-pandemic, it will be interesting to see what this means for the car market over the coming months.

The continued boom in electric vehicle adoption will be a key part of this picture, including many companies assessing their fleet and company car schemes, in light of their ESG commitments.

Richard Peberdy, UK head of automotive, KPMG

Recovery will be down to manufacturers

The reality is that new car sales continue to be stuck in the slow lane.

And with little evidence to suggest an easing of ongoing supply chain blockages and microchip shortages that beset car manufacturers last year, the new car market has some tough months ahead.

Any recovery in new car sales will very much depend on how quickly manufacturers can resume normal operations.

There is still plenty of pent-up demand out there to buy new, but until delivery wait times drop considerably, buyers will either delay purchasing or continue to switch their attention to the used car market for value and availability.

Alex Buttle, co-founder, Motorway

Too early to say market is firing on all cylinders

It would be premature to say that the new car market is firing on all cylinders.

We reckon there were about 1.4m lost car sales over the course of the pandemic, caused, in part, by bottlenecks in the supply chain. Normal volumes are unlikely to return until the middle of the year at the earliest and, for many manufacturers, not until the final quarter of 2022.

These ongoing stock challenges will undermine the market’s full potential for this year. We expect just under two million sales in 2022, up from the 1.65m vehicles registered in 2021.

Ian Plummer, commercial director, Auto Trader

Still cause for optimism

While year-on-year registrations are up, the new car market continues to face considerable challenges. However, there are increasing reasons to be optimistic about its future.

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There still remain unknowns – will manufacturers offer incentives to customers to ensure they hoover up market share – or will they be confident that there is enough pent-up demand to make that unnecessary?

Nevertheless, dealers can be confident that with restrictions removed, the remainder of 2022 will see a return to normality that has eluded them for so much of the past two years.

Chris Evans, head of sales, Heycar

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.

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