New car supply issues could hamper market recovery, Cox Automotive warns
10 May 2021
Author: Sean Keywood
Growth seen in the UK new car market last month could be short-lived, due to new car production issues affecting supply, according to automotive services firm Cox Automotive.
Although year-on-year comparisons were of limited use last month after the first Covid-19 lockdown shut showrooms in April 2020, Cox reports that the UK saw the second-strongest market growth in Europe, while its 12% decline compared with April 2019 was also ahead of other European countries.
However, Cox said that caution was needed, with significant disruption expected in the next few months.
Insight and strategy director Philip Nothard said: "Showroom re-openings and the easing of lockdown restrictions delivered a vital boost [in April]. Still, retailers need to remain vigilant in the months to come and not be blindsided by this early optimism.
"The new car market is undergoing some of the most severe raw material shortages for decades, with semiconductors, aluminium and rubber at a premium. Manufacturers are reporting real challenges with some forced to halt production and others considerably slowing down volumes.
"This could have a more significant impact on the vehicle retail sector than coronavirus itself."
Nothard added that the used car market would also be affected.
He said: "With new-car supply limping, there will be fewer part-exchanges available for dealers to take advantage of, triggering a reduced supply of used cars into the market.
"Furthermore, fewer cars will go into fleet channels, affecting de-fleeting and will continue to affect used supply. These challenges could well leave the market reeling until deep into 2022."