Chip shortage puts brake on UK new car sales despite jump from 2020

The global chip shortage proved a roadblock on the “journey to recovery” for UK car sales last month, with new registrations still well below pre-pandemic levels despite a steep increase compared with 2020 figures.

Some 186,128 new cars were sold in June, according to the Society of Motor Manufacturers and Traders, a figure that was 28 per cent higher than the same month last year, when some showrooms were still closed and others had opened for the first time since lockdown. 

However, the monthly figure was 17 per cent below the 223,421 sales reported in June 2019, and comes as the industry faces hundreds of thousands of lost sales because of the semiconductor shortages that have seen factories across the world close.

“With no end in sight for the global semiconductor shortage, the motor industry is facing severe supply issues that risk serious roadblocks on the journey to recovery,” said Sean Kemple, managing director of Close Brothers Motor Finance.

Despite pent-up demand from consumers for new vehicles, the industry has struggled to meet demand because of the chip shortfall, which is expected to hit production levels well into the second half of the year. 

Ian Plummer, commercial director at online marketplace Auto Trader, said: “It is worth bearing in mind that the performance we’re seeing now is based on a significant number of orders which were taken before the semiconductor shortage came into effect. It’s likely therefore that the full impact will be more evident over the months to come.”

Electric sales rose strongly last month, overtaking diesel sales as demand for the once-dominant fuel continued its long slide.

Battery electric cars accounted for 10.7 per cent of sales, while hybrid vehicles that can plug in were 6.5 per cent of sales. In total, one in four vehicles sold during the months is driven using a battery.

Diesel, which once made up more than half of all sales, accounted for just 8 per cent of sales in June.

“The new car industry will feel somewhat deflated by these numbers, although electric and plug-in hybrid car sales are showing exactly where the road to recovery lies,” said Alex Buttle, marketing director of used car marketplace Motorway.

The disruption to the supply of new cars has seen prices for second hand models rise dramatically over the past year.

Mike Hawes, SMMT chief executive, said: “With the final phases of the UK’s vaccine rollout well under way and confidence increasing, the automotive sector is now battling against a ‘long Covid’ of vehicle supply challenges.”

The industry has also previously warned of the hidden employment impact of the furlough scheme, which is not scheduled to end fully until September this year.