Supply chain crisis impacting new car market during ‘new numberplate’ month

6th Apr 2022

According to new date rom the Society of Motor Manufacturers and Traders (SMMT), UK new car registrations fell by 14.3% to 243,479 units in March - largely due to the impact of the ongoing supply chain squeeze for carmakers.

Despite manufacturers reporting robust order books during the first quarter, ongoing supply chain shortages – especially of semiconductors – continued to impact supply chains during what is normally the industry’s busiest month as buyers demand the latest numberplate. Each new car can use up to 3,000 semiconductors.

As a result, this is the weakest March since 1998 - which was prior to the introduction of the two-plate system.

Normally, around 20% of total annual registrations are recorded in March. This week's news is massively disappointing for the sector, and underscores the long-term impact the pandemic is wreaking on the industry.

In spite of the rollback of pandemic restrictions, which limited the industry to ’click and collect‘ in the first part of 2021, overall Q1 registrations for 2022 were down 1.9%.

While private registrations grew by 8.2% in the month, March 2021 had seen showrooms closed due to social distancing regulations.

Large fleet registrations, meanwhile, declined by 34.4% but business registrations grew by 20.0% as manufacturers prioritised private consumer and smaller business orders.

Although falling car production has been blamed on an ongoing global shortage of computer chips and the wide reaching impact of the Russian invasion of Ukraine - according to the SMMT data, the electric car sales market is continuing to grow.

Battery electric vehicles (BEVs) are seeing tremendous growth, with 39,315 new zero emission cars leaving dealerships – an increase of 78.7% on last year – and taking a 16.1% market share.

This is the highest volume of BEV registrations ever recorded in a single month, and means that more were registered in March 2022 than during the entirety of 2019.2 Plug-in hybrid (PHEVs) registrations declined by -7.5% to 16,037 units, but hybrids (HEVs) grew 28.4% to 27,737 units. As a result, electrified vehicles comprised more than a third (34.1%) of all new car registrations.

Mike Hawes, SMMT Chief Executive, said: "March is typically the biggest month of the year for the new car market, so this performance is deeply disappointing and lays bare the challenges ahead. 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. 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.

"With increasing household and business costs, government must do all it can to support consumers so that the growth of electric vehicles can be sustained and the UK’s ambitious net zero timetable delivered."