New car registrations hit 24-year low in March

UK new car registrations fell by 14.3 per cent to 243,479 units in March. Despite manufacturers reporting robust order books during the first quarter, the Society of Motor Manufacturers and Traders (SMMT) shares that ongoing supply chain shortages – especially of semiconductors – continued to squeeze supply during what is normally a busy ‘new plate’ month.

This is, therefore, the weakest March since 1998, which was prior to the introduction of the two-plate system. Given around 20 per cent of total annual registrations are usually recorded in March, the SMMT considers this result “massively disappointing for the sector” and one that “underscores the long-term impact the pandemic is wreaking on the industry.” In spite of the rollback of pandemic restrictions, which limited the industry to ’click and collect‘ in the first part of 2021, overall Q1 registrations for 2022 were down 1.9 per cent.

While private registrations grew by 8.2% in the month, March 2021 had seen showrooms closed due to social distancing regulations. Large fleet registrations, meanwhile, declined by -34.4% but business registrations grew by 20.0% as manufacturers prioritised private consumer and smaller business orders.

Battery electric vehicles (BEVs) continued to enjoy tremendous growth, with 39,315 new zero emission cars leaving dealerships – an increase of 78.7 per cent on last year – and taking a 16.1 per cent market share. This is the highest volume of BEV registrations ever recorded in a single month and means that more were registered in March 2022 than during the entirety of 2019. Plug-in hybrid (PHEVs) registrations declined by 7.5 per cent to 16,037 units, but hybrids (HEVs) grew 28.4 per cent to 27,737 units. As a result, electrified vehicles comprised 34.1 per cent of all new car registrations.

Supply constraints hindering full recovery

With the industry reporting strong order books, SMMT stresses that it is constraints on supply that are preventing the sector from moving into full recovery. The shortage of semiconductors, itself an effect of the pandemic, is affecting the sector globally but the trade association believes that longer-term uncertainty remains, with the invasion of Ukraine raising risk to supply chains. More broadly, however, it views economic headwinds such as rising energy costs, fuel costs, inflation and a squeeze on household incomes as factors that could impact new vehicle demand. But with grants for BEVs ongoing until at least next March, interest rates still low and electric cars benefiting from lower running costs, significant benefits exist for drivers who can order new vehicles now.

“March is typically the biggest month of the year for the new car market, so this performance is deeply disappointing and lays bare the challenges ahead,” comments Mike Hawes, SMMT chief executive. “While demand remains robust, this decline illustrates the severity of the global semiconductor shortage, as manufacturers strive to deliver the latest, lowest emission vehicles to eagerly awaiting customers.

“Placing orders now will be beneficial for those looking to take advantage of incentives and lower running costs for electric vehicles, especially as the Ukraine crisis could affect supply still further,” Hawes continues. “With increasing household and business costs, government must do all it can to support consumers so that the growth of electric vehicles can be sustained and the UK’s ambitious net zero timetable delivered.”