Pressures on the supply of new cars will continue to be felt until 2022, fueling the current surge in used car prices
The UK new car industry is not only affected by the global semiconductor shortage, but also by Brexit and agency sales models.
This is the point of view of Cox Automotive. Its director of strategy and ideas, Philip Nothard, has warned that further disruptions following the fall in new car sales last month are expected to continue.
The supply chain for new motor vehicles is not only feeling the effect of a semiconductor shortage, but also an assortment of concerns, including Brexit and agency sales models, Nothard explains.
“We are all very aware of the challenges caused by semiconductor shortages. However, the new vehicle market faces even greater challenges which are likely to contribute to further decline in the market. For example, the real impact of Brexit is yet to be felt.
“The automotive industry in the UK and around the world needs to change and rethink its distribution strategies. This can cause a delay in the movement of goods to the UK.
“In addition, manufacturers face outstanding issues as new vehicle tariffs will be applied to new cars entering the country when production catches up.”
Nothard believes agency sales and online sales growth are also challenges.
“There is also the planning or adaptation of agency model strategies by automakers in the process of selling new cars,” he says.
“Consumers are increasingly buying online, which also extends to cars for those who decide not to go through the traditional sales process at dealerships.
“The pandemic has given automakers and dealers time to think about the way they sell cars and the increasing ways in which this can happen.”
Ultimately, although retailers and OEMs face supply challenges, they will remain focused on annual market shares in each global market and where they stand relative to their peers.
Nothard also points out that automakers’ electrification strategies are having a profound impact on new vehicle registrations – the latest SMMT figures showed that June’s top-selling new car was the Tesla Model 3 electric.
“Manufacturers will be aware of the impending introduction of fines for those who violate Corporate Average Fuel Economy (CAFE) regulations, which will push traditional OEMs into the electric vehicle market.
“In addition, we will likely see more EVs topping the list for vehicle registrations in the future, as many OEMs use raw material shortages to accelerate the transition from ICE (internal combustion engine) to electric vehicles.
“This disruption is likely to keep the used vehicle market on its upward trajectory in terms of vehicle prices and demand.
“Ultimately, although retailers and OEMs face sourcing challenges, they will remain focused on annual market shares in each global market and where they stand relative to their peers.”
Nothard believes that the pressures on the supply of new cars will continue to be felt until 2022 and will fuel the current surge in used car prices.
However, he predicts that the situation will stabilize with the onset of winter, the end of the holidays and the opening of the economy – forcing consumers to spend their money elsewhere and subsequently allowing the government to start recovering. the loans.
“Now is a great time to sell a used car because they will get higher prices, but not so much to buy one.
“In addition, this is also not good news for dealers operating in current or expanding ULEZ areas in London.
“Trying to sell a non-compliant gasoline or diesel car in this area will be more difficult.”