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Car market may never return to pre-pandemic levels, Cox Automotive warns

Date: 20 April 2022   |   Author: Sean Keywood

The automotive market may never return to the levels seen before the Covid-19 pandemic, with new and used car sales continuing to be hit by several headwinds, according to data firm Cox Automotive.

It said it had downgraded its forecasts for 2022 new car sales to reflect the ongoing challenges, which it predicts will continue until at least Q2 next year.

The company's insight and strategy director Philip Nothard said that despite anecdotal reports that manufacturers have begun to fulfil orders from a supply-starved leasing sector, and even reports of tactical registrations, supply had not picked up in the volumes anticipated.

It has therefore revised its baseline year-end new sales projection for the UK to 1.65 million, a 13.8% downgrade - although this would still represent a 0.2% increase year-on-year.

Nothard said: "It is looking increasingly likely that the pre-pandemic automotive market we all knew may never return as the sector continues to be hit by headwinds. 

"Whether it is a growing number of manufacturers switching to the agency model or ongoing supply chain disruption, the UK's automotive sector looks set for short to medium-term volatility and may well emerge from this looking completely different to pre-pandemic levels."

Nothard said that hopes 2022 would bring a steady recovery from the global semiconductor crisis and other component supply problems had been dashed, with the conflict in Ukraine impacting the automotive supply chain and the entire logistics and distribution network.

He added: "Supply headaches also persist from the long-awaited fulfilment of orders made 12 or even 18 months ago. 

"However, there are also reports of this year's order books already being full, so it's clear the backlog of orders will only grow, and new orders won't turn into actual registrations until at least H2 2022 or even into 2023."

Nothard said many newly-built cars continued to be missing equipment such as touchscreens and heated seats due to short-term measures being implemented by manufacturers due to semiconductor shortages.

He also said that the drop in new car numbers would mean a continued supply and demand imbalance for the used car market.