Auto Trader's commercial director, Ian Plummer, shares his thoughts on the latest new car registrations from the Society of Motor Manufacturers and Traders (SMMT)
“The new car sector has been dealt a perfect storm of which the full impact on retail is only now being realised. The semi-conductor shortage coupled with rising commodity prices, has dramatically hampered new car production, and with no clear end in sight, it’s likely we’ll feel the ramifications into early next year.
“However, it would be easy to misinterpret these results as a drop in consumer demand for new cars, but our data shows that couldn’t be further from the truth. In fact, 1.4 million people viewed a new car on Auto Trader in July, which is up 6% compared to last year’s post lockdown July sales burst and more than double 2019 levels. With such strong demand, we’re clearly in the grips of a “seller’s market” at the moment, although the potential lost sales make the supply constraints all the more frustrating for car brands and retailers alike while they’re unable to reap all the benefits of this bounce back. Reassuringly however, with three quarters of car buyers prepared to buy a used car if their brand-new choice wasn’t available, our research highlights the opportunity to convert new buyers to used. This huge surge in demand, coupled with tightening supply, has pushed used car prices up a record 14.1% year-on-year; a trend which we may begin to see in the new car market too.
“As a result of these supply constraints, it’s now very hard to see full year sales getting up to let alone beyond the SMMT’s latest 2021 forecast of circa 1.82 million new car. However, if we had free supply, and based on the current levels of consumer demand in the market, as well as improvements in the key economic metrics of improved consumer confidence and lower than expected unemployment rates, our modelling suggests that the market would achieve a natural level of a far more robust 2.4 million.
“It’s good to see another strong performance for electric and alternatively fuelled vehicles. On our marketplace, plug-in electric cars account for one in seven searches, and in July, levels of demand had increased over 100% year-on-year. However, battery electric vehicles are predicted to account for less than 10% of the new car market this year, which highlights just how far we have to go to meet the government’s ambitious 2030 “road to zero” targets. I hope this acts as a wake-up call that more needs to be done to help convert considerers into buyers. Comments from Allegra Stratton over the weekend only serve to fuel misconceptions amongst car buyers and risks undermining industry efforts.”