Sales of new electric cars only bright spark for UK industry in flat 2021

The UK car industry says growing demand for electric cars was the only “bright spot” for the sector last year as a string of coronavirus crisis-related challenges combined to knock sales.

The Society of Motor Manufacturers and Traders (SMMT) reported a rise of just 1% in overall new car sales during 2021 compared to the previous 12 months.

Industry figures released later on Thursday are expected to show that 1.65 million vehicles were registered – up from 1.63 million in 2020 when COVID pandemic disruption first began, shuttering showrooms as drivers were forced to stay at home during lockdowns.

A consequence of the public health emergency has been a hit to microchip production globally as factories were shut down.

It has meant that supply has failed to keep up with demand from semiconductor-intensive industries such as automakers to gaming system producers.

According to consulting firm AlixPartners, the chip shortage was tipped to have cost the world’s automotive industry $60bn (£45bn) in lost sales alone during the year.

The SMMT has previously forecast that the shortfall will continue to be felt at UK factories throughout 2022.

Data from Susquehanna Financial Group released this week, covering the time between a chip order and delivery, suggested lead times deteriorated by six days in December to almost 26 weeks.

The report blamed electricity restrictions in China coupled with outbreaks of the Omicron COVID variant for the longer lead times.

The affect in the UK to date has seen car production volumes in 2021 at levels last seen in the 1950s.

SMMT chief executive, Mike Hawes, said of the resulting picture for car sales: “The first half of the year was in lockdown and, despite online click and collect, and the industry really stepping up to deliver that, it was still a tough start to the year.”

He said things “didn’t improve significantly” in the latter six months “because of shortages in terms of supply”.

Because of the scarcity of new cars, demand for used vehicles has been soaring – driving up prices significantly and therefore contributing to the surge in inflation.

The consumer prices index measure hit its highest level for a decade in November.

Mr Hawes said the increased popularity of electric cars was “the one very strong and bright spot on the horizon”.

The Tesla Model 3 was expected to be confirmed as the most popular electric vehicle when the full figures were released – second in the entire rankings for the most popular new cars behind the Vauxhall Corsa.

It was the best year on record for plug-in cars, both battery electrics and plug-in hybrids, with 305,000 registered, accounting for around one in six of all new cars bought.

More battery electric vehicles were registered last year than between 2016 and 2020 combined as the clock ticks down to the 2030 ban on the sale of new cars powered by petrol and diesel engines.

Mr Hawes stressed the importance of “continued investment” in electric vehicles, saying it “doesn’t help” when cuts are made to government grants.

The latest, last month, saw the maximum amount of cash motorists can claim towards a plug-in car fall £1,000 to £1,500.

The Department for Transport said the move would let the scheme “help more people”.

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