August car market down by 22 per cent as component shortages cause delays

Torbay Weekly

The new car market is now affected badly by the semi-conductor shortage and this is unlikely to be resolved until next year.

Pure electric, plug-in petrol hybrids and mild petrol hybrids continue to take larger shares of the market and diesel sales are now running at less than 50 per cent of  the same period in 2020 as demand and production fall.

The Ford Puma was the best-selling car and Volkswagen was again the top-selling brand.

New electric vehicles now have increased range and the anxiety has moved to the lack of public charging facilities to deal with the increased sales and confidence in longer journeys.

Expect to see development of charging stations throughout the UK as specialist entrepreneurs join traditional petrol stations in providing charging to meet the increasing demand.

New product will continue to arrive as manufacturers respond to Government pressure and congestion charges arrive in many UK cities.

Prices will continue to be more competitive as businesses buy more electric vehicles to cut costs for themselves and their employees.

Sales of new vans had their second-best August ever as outstanding orders came through but order now if you want delivery in the first quarter of 2022 as they will be affected by the component shortage as well.

Used car and van prices continue to rise as stocks diminish and there seems little likelihood this will change until new vehicle deliveries catch up next year although September’s new car sales will replenish used stocks from trade-ins to some degree.

Manufacturers are revealing strong half-year profits so have bounced back very quickly from the Covid pandemic and some have already announced their intention to reduce the number of dealers to further cut costs.

The National Franchise Dealers' Association runs a survey biannually to monitor the relationship between manufacturers and their dealers and there are dramatic differences between those who look after their dealers and those that do not.

This is only important to customers because dealers need to get a reasonable return on their investments to provide proper premises, equipment, and competently trained employees to look after both the product and their customers in a satisfactory manner.

Longer lead times for cars, vans and parts is not a good long-term solution and although the reasons for the shortage of semi-conductors is a one-off, dealers must expect a return to previous levels of support as soon as possible, to allow them look after their customers professionally.

Some manufacturers are very good but others have big improvements to make.

The dealer body understands profits need to be made to provide funds for future investments, of which electric vehicles is a prime example, but with fewer ownerships and companies being run on a global platform there is a danger that some requirements will not revert to pre-pandemic standards and competitiveness could also be reduced.

This NFDA survey is a vital tool to let the dealers and manufacturers know the current situation and hopefully where they are failing, to react to it.

Dealers are expected to meet manufacturer standards and are penalised when they fail – let's hope manufacturers do the same.

Keep safe and keep smiling. I look forward to next week.