Rolling coverage of the latest economic and financial news
- Latest: August car sales hit eight-year low
- Introduction: Car sales dropped last month, preliminary data shows
- German factory orders jump, thanks to shipbuilding demand
- UK labour crisis could last up to two years, CBI warns
Karen Johnson, head of retail & wholesale at Barclays Corporate Banking, warns that supply chain problems could hit car sales in September, usually a bumper month for demand:
“We might be in the ‘new normal’, but it’s the same old patterns for UK car dealers. August has upheld its reputation as a typically quieter month for new car registrations, with sales falling both month on month and year on year.”
“Although there continue to be positive reports of strong used car sales, dealers across the country will already be looking ahead and wondering how much the shortage of new vehicles is going to impact registrations in September?”
“After a poor July, sales of new cars continued to disappoint in August. But there is an important silver lining to the clouds currently hanging over the market – the culprit is likely to be patchy supply rather than flagging demand.
“In July the number of cars leaving UK factories and heading for the domestic market slumped by 38.7%, meaning that despite dealers’ best efforts to fulfill orders as quickly as possible, too often they just don’t have the vehicles to sell.
“Unless something drastically changes in the remaining four months of the year, it’s looking unlikely that the manufacturing shortages hitting the car industry will level out by the end of 2021. The ongoing impact of the chip shortage means that a full recovery is not in sight for quite some time.
“Retailers are being asked to sell according to what manufacturers are able to produce, meaning that consumer choice is limited. However, this means consumers may be more likely to get a discounted price. For customers who aren’t willing to be flexible, it may be best to wait for things to get back to normal and for manufacturing to pick up again.”
Just in: last month was the weakest August for UK car sales in eight years, as supply issues continue to undermine the market.
Industry body the Society of Motor Manufacturers and Traders reports there were just 68,033 new cars registered in August, a drop of 22% compared with last year.
The global shortage of semiconductors has affected UK, and indeed global, car production volumes so new car registrations will inevitably be undermined. Government can help by continuing the supportive Covid measures in place currently, especially the furlough scheme which has proven invaluable to so many businesses.
“As we enter the important September plate-change month with an ever-increasing range of electrified models and attractive deals, buyers in the market for the new 71 plate can be reassured manufacturers are doing all they can to ensure prompt deliveries.”