The UK’s car industry saw its worst March for new car sales in 24 years last month as UK households felt the cost of living squeeze.
Just 243,479 new cars were registered last month, down 14.3% compared with March 2021, the Society of Motor Manufacturers and Traders (SMMT) said.
March is traditionally the strongest month for new car sales because of the number plate change but the car industry continues to battle a global chip shortage that has hampered production.
“The cost of living crisis is having an impact on people’s purchasing power, which coupled with the continued interruption in the global supply of parts means new car dealers are facing challenging times,” James Fairclough, CEO of AA Cars, said.
“Even the arrival of the new number plates at the start of March could not unwind the difficulties the new car market is facing.”
SMMT chief executive, Mike Hawes, described the March figures as “deeply disappointing” overall.
“While demand remains robust, this decline illustrates the severity of the global semiconductor shortage, as manufacturers strive to deliver the latest, lowest emission vehicles to eagerly awaiting customers,” he said.
“Placing orders now will be beneficial for those looking to take advantage of incentives and lower running costs for electric vehicles, especially as the Ukraine crisis could affect supply still further.
Vauxhall’s Corsa remains the most-bought new model in 2022, with 9,797 sold in the year so far, some 1,100 units ahead of the next best seller, Kia’s Sportage SUV.
But electric car sales are rising rapidly, the SMMT said.
The SMMT said 39,315 new zero-emission cars left dealerships last month, up 79% from a year earlier and accounting for nearly a sixth of the car market.
The Tesla (TSLA) Model Y was the most popular new car in the UK in March, with 6,464 units sold, followed by the Tesla Model 3 with 6,457 units driving out of forecourts.
“There was already massive growth in this segment and, if anything, the demand for EVs is now even stronger as prices at the pumps rise on the back of the Ukraine crisis,” said Ian Plummer, director at online car marketplace Auto Trader.
Richard Peberdy, UK head of automotive at KPMG, said a combination of supply shortages, the war in Ukraine and heightened restrictions in China will likely see car makers continue to focus on their outputs of “higher margin models”, which includes battery electric vehicles (BEVs).
A record 64,165 BEVs were registered in March. That is up 78.7% on the same month in 2021, taking a 16.1% market share.
More BEVs were registered last month than during the whole of 2019.
The fall in UK new-car sales in March also impacted first-quarter numbers, with overall registrations for the first three months of 2022 falling 1.9% to 417,560.