UK Car Industry Sees Worst March for New Car Sales in 24 Years

The UK’s car industry is facing tough times as new car sales hit a 24-year low in March. With just 243,479 new cars registered last month, down 14.3% compared to the previous year, it’s clear that households are feeling the pinch of the cost of living squeeze.

The global chip shortage has been a major factor in the decline, as manufacturers struggle to keep up with production demands. Despite March traditionally being a strong month for new car sales due to the number plate change, the industry continues to face challenges.

James Fairclough, CEO of AA Cars, highlighted the impact of the cost of living crisis on purchasing power, making it difficult for new car dealers to thrive. Even the new number plates introduced in March couldn’t offset the challenges faced by the market.

SMMT chief executive, Mike Hawes, described the March figures as “deeply disappointing,” emphasizing the severity of the semiconductor shortage. He encouraged consumers to place orders early to take advantage of incentives and lower running costs for electric vehicles, especially with potential supply disruptions due to the Ukraine crisis.

Despite the overall decline in new car sales, electric car sales are on the rise. The SMMT reported a 79% increase in zero-emission car sales compared to the previous year, with electric vehicles accounting for nearly a sixth of the market. The Tesla Model Y emerged as the most popular new car in March, reflecting the growing demand for EVs.

With a record 64,165 battery electric vehicles registered in March, up 78.7% from the previous year, it’s clear that the shift towards electric vehicles is gaining momentum. More BEVs were registered last month than in the entire year of 2019, signaling a significant shift in consumer preferences.

While the challenges facing the car industry are significant, the focus on higher margin models like battery electric vehicles is expected to continue. With supply shortages, the war in Ukraine, and restrictions in China impacting production, car makers are likely to prioritize the production of EVs.

Overall, the decline in new car sales in March has had a significant impact on the first-quarter numbers, with registrations falling 1.9% to 417,560. As the industry navigates these challenges, the shift towards electric vehicles presents an opportunity for growth and innovation in the market.