UK car sales slump as makers warn on Brexit costs

The UK car industry has taken a hit in 2020, with new car sales plummeting by almost a third. The pandemic and Brexit uncertainty have contributed to this sharp decline, marking the lowest total since 1992. The Society of Motor Manufacturers and Traders (SMMT) reported a 29% year-on-year fall, resulting in a loss of £20.4bn for the industry.

Showroom closures and consumer confidence issues due to Brexit uncertainties have played a significant role in this decline. However, there is hope for a recovery with the ongoing COVID-19 vaccine rollout. The SMMT believes that the industry has the potential to bounce back, despite the challenges posed by new lockdowns.

Interestingly, while overall car sales have dropped, 2020 was a record-breaking year for electric vehicles. The market share of battery and plug-in hybrid vehicles rose to 10.7%, with the Tesla Model 3 leading the way as the best-selling car in December.

Sean Kemple, managing director of Close Brothers Motor Finance, attributes the surge in demand for electric vehicles to the upcoming ban on new petrol and diesel cars in 2030. He predicts that the demand for alternative fuel vehicles will continue to rise in the coming years.

Investment in charging infrastructure and battery gigafactories is now crucial for the industry’s revival and to meet the challenges of post-Brexit electrification. Chief executive Mike Hawes emphasized the need for £16bn to be spent on plug-in infrastructure, especially for motorists who do not have driveways.

While the last-minute Brexit trade deal provided some relief to the automotive industry, Hawes warned that additional costs would still be incurred despite tariff-free trade with the EU. The Ford Fiesta emerged as the best-selling car of 2020, with 49,174 new registrations.

Overall, the UK car industry faces challenges ahead, but there is optimism for a recovery with the increasing demand for electric vehicles and the necessary investments in infrastructure. Watch this space for further developments in the industry.