New car registrations plummeted by 35 per cent to reach record lows in September as the industry continues to battle devastating semiconductor shortages, the Society of Motor Manufacturers and Traders (SMMT) has said.
Just 214,000 new cars were registered in what is traditionally a key month for the industry with new plates coming in.
The SMMT says the figure is the weakest September on record since the ‘two-plate’ system for new cars was introduced in 1999.
It is a drop of 114,000 from September 2020 – which was itself a record-low for the month.
Diesel cars saw the biggest slump, dropping to 10,658 registrations from 46,996 in the same month last year – a slide of 77.3 per cent.
Petrol cars were also hit hard, dropping by 46.6 per cent from 176,152 in September 2020 to 93,314 in 2021.
There was also a 10.1 per cent decrease in registrations of MHEV petrol cars, from 30,382 to 27,362.
The best selling-vehicle in September was the all-electric Tesla Model 3 which sold 6,879 units.
It was closely followed by the Vauxhall Corsa on 5,235 and the BMW 3 Series on 4,788.
The slump in sales has been put down to the ongoing semiconductor crisis that has ground some production lines to a complete standstill.
The SMMT has warned that the shortage will ‘continue to plague the industry’ and cause an overall reduction of 100,000 in new vehicles being made in the UK.
Among the few shreds of comfort from the findings, is that battery electric vehicles (BEVs) soared to a record 32,000 in September.
The figure, which represents a 49.4 increase on September 2020, is only marginally smaller than the 37,850 BEVs sold throughout the whole of 2019.
Overall, there have now been 1,316,614 new cars registered throughout the year – a 5.9 per cent increase on the same point last year when there had been 1,243,656.
SMMT chief executive Mike Hawes said: ‘While not the only factor at play, the impact of the semiconductor shortage on manufacturing cannot be overstated.
‘Carmakers and their suppliers are battling to keep production lines rolling with constraints expected to continue well into 2022 and possibly beyond.
‘Job support schemes such as furlough have proven such a lifeline to automotive businesses yet its cessation comes at the worst time, with the industry still facing Covid-related stoppages which are damaging the sector and threatening the supply chain in particular.
‘Other countries have extended their support; we need the UK to do likewise.’
What is the industry saying?
Microchip shortage ‘crippling’ industry
September plate-change is normally a peak sales month for the industry, yet this year’s results demonstrate the crippling impact the ongoing microchip shortage has on the sector.
With registrations down a third compared to September last year, when the UK was free of the worst lockdown restrictions, manufacturers are struggling to meet demand, with some admitting waiting times for certain models have been pushed to beyond a year.
Even the most optimistic predictions do not see a return to normal until midway through 2022.
Electric vehicle sales are perhaps the only positive the industry can currently look forward to, with September seeing another extremely strong month for registrations With growing numbers of electric and plug-in vehicles on the road, it’s important the charging infrastructure keeps pace with the uptake from electric drivers.
Jim Holder, editorial director, What Car?
Supply isn’t meeting customer demand
September is a key month in the UK vehicle calendar, as the release of a new number plate usually boosts sales across the board – but not in 2021. This latest set of results reflects the huge disappointment of consumers at forecourts around the country, as new registrations fell compared to 2020 and consumers are required to wait patiently for delivery in the months to come.
Many dealers have been impacted by shortages in the production of new cars, particularly from big-name European brands.
Whilst there is plenty of optimism about the desire to purchase new cars, supply simply isn’t meeting consumer demand. Dealers need to see this ramp up rapidly.
Karen Johnson, head of retail & wholesale at Barclays Corporate Banking
Radical change may be needed
These figures will likely disappoint for a plate-change month that typically sees a noticeable boost in new car registrations.
Intense new vehicle supply issues due to the likes of chip shortages and some remaining Covid-related factory output problems will be limiting some sales, while levels of inflation in parts of the economy are also spooking motorists and businesses into tightening spending.
That said, electric vehicle sales continue to rise, with problems at the pumps likely to push more motorists towards considering hybrid and electric models.
Radical change in carmakers’ business models may be necessary to facilitate the electric transition, where they pivot to behave more like mobile phone companies.
Mobility packages are now being developed where consumers get the use of a vehicle, a charger on the wall and a new energy tariff to boot, much like how data plans work with mobile phones
Richard Peberdy, UK head of automotive at KPMG
Results are an ‘out and out disappointment’
The traditional September boost from the arrival of new registration plates was nowhere to be seen. August’s sales figures were lacklustre, but September’s fall in sales was an out and out disappointment.
The supply of new cars has stubbornly failed to improve. In August the number of cars leaving UK factories slumped by a further 27 per cent, the second successive fall in output.
Despite dealers’ best efforts to fulfill customer orders as quickly as possible, too often they just don’t have the vehicles to sell.
While these supply shortages are likely to be temporary, for now they are proving frustrating for both dealers and motorists.
James Fairclough, CEO of AA Cars
Supply issues unlikely to ease until well into 2022
Despite the ongoing supply challenges facing the UK car industry, the industry was pinning its hopes on robust new car sales in September, with the reg plate change kickstarting demand growth alongside the surging used car market, which is already super-buoyant with sales continuing to accelerate.
But with data showing that last month was the worst number plate change for new car registrations on record, these hopes have been somewhat dashed.
New car supply issues are unlikely to ease until well into 2022, with production lines still being disrupted by the effects of the pandemic, including logistics issues and labour shortages.
The used car market will continue to benefit from disenchanted buyers who are unwilling to wait for a new vehicle.
The speed and convenience advantages of being able to buy nearly-new online and secure a vehicle for collection or delivery the same day will continue to grow in appeal.
Alex Buttle, director of Motorway.co.uk
Industry struggling with rising prices of critical components
Beyond the well-publicised semiconductor shortage, the industry is struggling with rising prices for critical components such as steel and resin.
Steel prices have increased by almost 200 per cent in the past 12 months. Like lumber, resin and semiconductors, the steel industry did not predict the switch in consumption patterns that COVID-19 brought.
With steel heavy industries like oil and gas seeing high demand right now as the economy reopens, the shortage and the high prices are expected to last well into 2022 posing further challenges to automotive, both manufacturing and retail.
The semiconductor shortage has been a major contributor to falling UK car production figures and has also resulted in rising order banks into hundreds of thousands.
Manu Varghese, from EY’s UK & Ireland advanced manufacturing & mobility team
Decline ‘disappointing albeit expected’
Whilst September is an important month for the sector and the decline is disappointing, albeit expected, retailers continue to experience robust consumer demand with a strong used car market and increasing appetite for EVs, partly driven by the fuel issues at the end of the month.
It is positive that the plug-in electric vehicle market continues to expand. Franchised dealers have been investing in their sites and staff training to support the transition to zero emissions and the growth of the market demonstrates it.
As we enter the final quarter of the year, we will monitor the impact that supply constraints have on the market, with retailers continuing to play a central role in helping their customers to find the vehicle that best suits them.
Sue Robinson, Chief Executive of the National Franchised Dealers Association