An automobile industry body in the UK on Friday slashed its full-year outlook for car registrations in the country by 2.2%, as supply chain issues, sky-high inflation and a cost of living crisis threaten to limit consumer spending.
Car registrations for 2022 are on track to see its worst year in four decades, the Society of Motor Manufacturers and Traders (SMMT) said.
For 2022, the SMMT expects 1.566 million new car registrations, down roughly 5% from a year ago, when car registrations were still 28.7% below pre-pandemic levels.
Britain’s auto market, still reeling from the impact of chip shortages plaguing the globe, has been hit by the cost of living crisis, which has seen consumers limit big-ticket purchases.
Still, for October, new car registrations were up 26.4% from a year ago, when registrations were hit due to the fallout from the COVID-19 pandemic and supply chain disruptions.
“A strong October is hugely welcome, albeit in comparison with a weak 2021, but it is still not enough to offset the damage done by the pandemic and subsequent supply shortages,” SMMT Chief Executive Mike Hawes said.
However, the industry body said it expects a market recovery to continue through 2023 and registrations for 2023 to be at about 1.8 million units.
Deliveries of hybrid electric vehicles (HEVs), meanwhile, soared 81.7% to account for more than one in 10 new cars in October, the SMMT said.
A long-term fiscal commitment to zero emission motoring would do much to stimulate investment and demand, the SMMT said.
Britain’s new Prime Minister Rishi Sunak, who replaced Liz Truss after her brief stint, takes on an economy facing recession at a time when the Bank of England is raising interest rates to tame double-digit inflation.
Sunak’s first fiscal statement due on Nov. 17 is now being keenly watched by market participants.
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More than one in 10 cars sold, or 11.9%, was a fully electric, zero-emission model as sales of such models rose 22% versus the third quarter of 2021.