UK car sales slumped by a fifth last month compared with a year earlier as the semiconductor shortage continued to bite and the industry raised concerns over the impact of inflation on the market.
New UK car registrations fell by 20.6% year on year to 124,400 in the second weakest May since 1992, according to the Society of Motor Manufacturers and Traders (SMMT), a lobby group.
Dealers of both new and used cars have experienced strong demand for vehicles since dealerships reopened after the first Covid pandemic lockdowns in 2020, which had allowed wealthier households to save more.
However, carmakers have been unable to take advantage of the demand because of the crisis in global supply chains, with semiconductors used to make the computer chips that control everything from entertainment systems to windscreen wipers and car batteries in particularly short supply. The Intel chief executive, Pat Gelsinger, last month said he did not expect shortages to end until 2024, later than most carmakers expect.
Other parts in short supply have included wire harnesses, relatively simple components that bundle together cables used to control different systems in a car. Several carmakers sourced wire harnesses from Ukraine, where production has been disrupted by Russia’s invasion.
The SMMT said carmakers in the UK were focusing on delivering electric vehicles as they try to meet tightening carbon emissions regulations. Electric vehicles accounted for nearly a fifth of all new car sales in May, and 14% in the year so far with a record 92,000 sold.
Overall the UK new car market remained nearly a third below the 2019 pre-pandemic level despite all of the orders on manufacturers’ books.
The car industry is warning that high inflation could stifle
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