New car sales in the UK plunged 22% in August as the global supply chain crisis continues to challenge industries.
Industry data released by the Society of Motor Manufacturers and Traders (SMMT Monday showed that new car registrations dropped by around 22% last month compared with the same time a year ago.
The 22% decline follows a plunge of around 30% in July when large numbers of people were self-isolating – a period known as the ‘pingdemic’.
New UK Car Sales Hit From Both Sides
The continued decline of new car sales in the UK should be expected. August is a traditionally quiet month for new car sales, but there has been increased pressure on both suppliers and buyers of new cars.
For a start, the global microchip and raw materials shortage dominating the economic news has affected the car industry like so many other industries. The shortage in semiconductor chips, which are the “brain” inside every kind of electronic device, from PCs and TVs to games consoles and cars, has hampered economies for nearly 18 months.
New car sales in the UK have also been hit by consumers either self-isolating or lacking in confidence. August saw a noticeable dip in UK consumer confidence as consumers hold back to see where the latest variant outbreak takes them.
Finally, demand for new cars in the UK could be hit further by new hybrid working models which see people spending less time traveling to and from a workplace.
Hope Ahead for UK Car Sales?
Despite a second consecutive month of declines for new UK sales, there is some sunlight breaking the doomy clouds of decline. Over the first eight months of the year, the market is up around 20% from 2020 and slowly but surely, the UK economy is opening up and returning to pre-pandemic levels.
Another factor worth considering is that although UK consumers are not spending, they are saving. British households saved 20% of their disposable income in the first quarter of 2021. The saving ratio increased to 19.9%, as lockdown meant limited opportunities to spend their money whilst shops, bars, and restaurants were closed.
