New car sales grow 23.5 per cent but still below pre-pandemic levels

• New car market grew for the fourth month running, up by 23.5 per cent in November with 142,889 sales, according to the SMMT
• November’s registrations are still 8.8 per cent below 2019 levels
• Dealers report orders being cancelled in recent weeks as car buyers grow anxious about the gloomy economic situation 

The UK new car market grew by nearly a quarter (23.5 per cent) in November to 142,889 sales, making it the fourth consecutive month of year-on-year growth, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

The SMMT said that manufacturers have been “continuing efforts to fulfil orders amid erratic global components supply” and that sales of electric vehicles (EVs), along with increased fleet registrations, were the main factors behind the growth.

However, November’s registrations were almost nine per cent below 2019 levels and the market will not reach pre-pandemic levels this year amid the UK’s economic turmoil.

James Fairclough, CEO at AA Cars, said that with Britain "sliding into recession" four consecutive months of rising new car sales was particularly "impressive" but "the progress is all relative".

 

"Total sales so far this year are still 3.4 per cent down on the Covid-impacted numbers recorded at this point in 2021, and well adrift from their pre-pandemic levels," he said. 

“The supply of new vehicles is finally improving, with the SMMT recently confirming that UK car manufacturing output jumped by 7.4 per cent in October. But questions still remain about the durability of customer demand."

Business organisation the CBI is now predicting a year-long decline in consumer spending, revising its forecast for 2023 from one per cent growth in GDP to a contraction of 0.4 per cent. 

Barclays Corporate Banking said that vehicle dealers have concerns for the future with many reporting "growing consternation" among consumers.

Cancelled orders in recent weeks 

Karen Johnson, Barclays' head of retail and wholesale, said: "Reduced incentives, increased electricity costs and concerns about infrastructure are all contributing to a milder appetite for electric vehicles, with some previously confirmed orders even being cancelled in recent weeks.

"There is still clear demand for greener options, but going forward consumers look more likely to hedge their bets and buy hybrids. How long this lasts will be a key question for 2023.”

SMMT chief executive Mike Hawes sounded a more optimistic note, suggesting that "recovery for Britain’s new car market is back within our grasp".

However, he added: "Urgent measures are required – not least a fair approach to driving EV adoption that recognises these vehicles remain more expensive, and measures to compel investment in a charging network that is built ahead of need. By doing so we can encourage consumer appetite across the country and accelerate the UK’s journey to net zero.”

Impact of used car market on new car sales

Chris Evans, head of sales at online used car marketplace heycar, added: "As the year draws to a close, our main concern is that the used car price bubble is beginning to pop....[which] could spell trouble for the already weakened new car market as we go into 2023.

"We are already seeing signs of this trend in heycar’s Used Car Price Index where prices for used three-year-old cars dropped 5.33 per cent for diesels and 1.15 per cent for petrol."