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Annual car sales forecast lowered by 9% amid semiconductor shortage

The UK car industry has downgraded its forecast for the number of cars it expects to sell this year by 9% (Gareth Fuller/PA)
The UK car industry has downgraded its forecast for the number of cars it expects to sell this year by 9% (Gareth Fuller/PA)

The UK car industry has downgraded its forecast for the number of cars it expects to sell this year by 9%.

Around 1.72 million new cars will be registered in 2022, according to the Society of Motor Manufacturers and Traders (SMMT).

This is down from the forecast of 1.89 million issued in January.

The reduction comes as the number of new cars registered in April fell by 16% year-on-year.

Some 119,167 new cars were registered last month, down from 141,583 in April 2021.

This is despite lockdown restrictions meaning showrooms were closed for the first 11 days of April last year.

SMMT chief executive Mike Hawes said: “The worldwide semiconductor shortage continues to drag down the market, with global geopolitical issues threatening to undermine both supply and demand in the coming months.

“Manufacturers are doing everything they can to deliver the latest low and zero emission vehicles, and those considering purchase should look to place their orders now to benefit from incentives, low interest rates and reduced running costs.

“Accelerating the transformation of the new car market and the carbon savings demanded of road transport in such difficult times requires not just the resolution of supply issues, however, but a broader package of measures that encourages customer demand and addresses obstacles, the biggest of which remains charging anxiety.”

Jim Holder, editorial director of magazine and website What Car?, said the latest monthly figures show the automotive industry is “in an increasingly precarious position”.

It has invested billions of pounds in developing new vehicles – including a raft of electrified models – but output is being “strangled by world events” such as a semiconductor shortage and the war in Ukraine, he explained.

He went on: “While profitability is high, the industry cannot expect to thrive in such a challenged market indefinitely – and likewise consumers cannot carry the burden of paying rising prices unchecked, especially as the cost of living elsewhere puts a focus on non-essential spending.”

Registrations of pure electric cars bucked the overall trend last month, with a 41% year-on-year increase.

The SMMT anticipates that plug-in cars such as pure electrics and plug-in hybrids will account for more than a quarter of the new car market by the end of 2022.

Alex Buttle, co-founder of used car marketplace Motorway.co.uk, said: “While new car sales overall continue to disappoint, once again it’s electric vehicles that are providing the silver lining to the dark cloud that is hanging over the new car industry.”

Ben Nelmes, co-founder and head of policy at green motoring consultancy New AutoMotive, said the “steady growth” in electric cars is welcome but the Government needs to “go faster” to encourage more people to make the switch from petrol and diesel cars.

The Government is planning to adopt a zero emission vehicle (ZEV) mandate, which will require manufacturers to sell a certain percentage of those cars and vans from 2024.

Mr Nelmes called on ministers to introduce this at an “ambitious California-style” level.

The US state has been implementing a ZEV mandate since 1990, with the percentage reaching 22% in 2025.

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