The UK Car Market Is Heading for Its Worst Sales Year Since 1982 - BLOOMBERG
NOVEMBER 04, 2022
(Bloomberg) -- Automakers are on course for their worst year of UK sales in four decades as supply-chain issues hamper output and a growing cost-of-living crisis puts off buyers.
The Society of Motor Manufacturers and Traders trade group on Friday cut its full-year outlook for new-car registrations for a third time in seven months to 1.57 million, the lowest since 1982.
Carmakers struggling with parts shortages now face intensifying headwinds including soaring energy and borrowing costs. The Bank of England on Thursday pushed through its biggest rate hike in 33 years and warned of a “very challenging” outlook for the UK economy. The central bank’s forecasts imply gross domestic product will fall for eight straight quarters until mid-2024.
“Major demand headwinds are building for households and businesses, and the latest assessments of UK economic growth prospects are bleak,” said David Leggett, an analyst at London-based research firm Globaldata Plc. He sees “very tough trading conditions in prospect for at least the next 18 months.”
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Sales of battery-powered vehicles have been a rare bright spot. Last month’s new-car registrations rose 26% in part because of surging demand for hybrid-electric models, the SMMT said. Still, the increase in October compares to a very weak prior-year month, and year-to-date deliveries are still roughly a third below what companies sold before the pandemic.
“A strong October is hugely welcome, albeit in comparison with a weak 2021, but it is still not enough to offset the damage done by the pandemic and subsequent supply shortages,” Mike Hawes, SMMT’s chief executive officer, said in a statement.
The lobby group started the year with a projection of 1.9 million vehicle sales, but lowered that estimate first in May and then again in August. While the SMMT expects the market to recover next year, to 1.81 million registrations, it said more public chargers are needed to ease consumers’ range anxiety and bolster sales of fully electric cars.