Plug-in models offer spark of hope as new car market suffers worst October in 30 years

New car market continues to feel impact of chip shortages and economic uncertainty

The UK new car market slumped to its worst October in 30 years as registrations dropped almost 25% on last year.

The industry is now expected to see a mere 1.9% growth on 2020 - a year when factories and dealerships were closed for months due to the Covid pandemic.

New car registrations were down 24.6% year-on-year, with just 106,265 recorded in October, according to industry body the Society of Motor Manufacturers and Traders (SMMT).

Petrol, diesel and hybrid registrations all fell significantly, with diesel down 66% and petrol down 30%, but plug-in vehicles, including EVs and plug-in hybrids continued to rise.

Chip shortages are having an ongoing impact on dealer supplies
Chip shortages are having an ongoing impact on dealer supplies
Chip shortages are having an ongoing impact on dealer supplies

EVs were up 73% compared with October 2020, continuing a trend throughout 2021 that has seen sharp monthly increases. Fully electric cars now account for 15.2% of the new car market, up from 6.6% in October 2020.

Plug-in hybrids also rose slightly, up 7.5% on last October and accounting for almost 8% of the market.

The SMMT now expects more plug-in vehicles to be registered in 2021 than in the whole of the preceding decade.

The body said the ongoing chip shortage affecting car production was still having a substantial impact on new car sales as dealers struggled to get the right stock.

Mike Hawes, SMMT chief executive, said: “The current performance reflects the challenging supply constraints, with the industry battling against semiconductor shortages and increasingly strong economic headwinds as inflation rises, taxes increase and consumer confidence has weakened.

“Electrified vehicles, however, continue to buck the trend, with almost one in six new cars registered this year capable of zero-emission motoring, growth that is fundamental to the UK’s ability to hit its net zero targets.”

Karen Hilton, chief commercial officer of marketplace Heycar warned that the ongoing parts shortage was likely to see manufacturers prioritise models with the highest profits, leaving some buyers struggling.

She said: “The coming months will of course see an increase in supply, but there will remain far too few semi-conductors to meet demand.

“Manufacturers will have to ration where these precious components are used - and they will almost certainly be reserved for the vehicles that provide them with the biggest profit margins.

“They can be found at the more expensive end of the market. So that means if you’re in the market for a BMW you’re likely to be able to get your hands on one sooner, than say, a Citroen.”

Industry observers said that while the figures made grim reading for new car sales, the ongoing pressure on the new car market was proving good news for used car sellers.

Ian Plummer, commercial director of Auto Trader, said the platform had seen a 25% increase in average used car values compared with October 2020 and one in four “young” used cars was now selling for more than a brand-new equivalent as dealers struggled to source new models.

(Photo: Paul Ellis/AFP via Getty Images)
(Photo: Paul Ellis/AFP via Getty Images)
(Photo: Paul Ellis/AFP via Getty Images)

He added that the recent fuel crisis had brought a significant increase in interest in EVs, commenting: “We always say that cost and convenience are the key drivers of car purchasing. EVs are at a disadvantage on both fronts, but the empty petrol pumps and massive queues have certainly challenged that.”

That view was echoed by James Fairclough, CEO of AA Cars, who added: “October’s double whammy of fuel shortages and rapidly rising fuel prices certainly gave EVs the best possible advert, encouraging many buyers who had already been considering a switch to an EV to bring forward their decision.

“The buzz around EVs created by this week’s COP26 summit in Glasgow may nudge even more drivers to go electric in coming months.”