Shifting patterns of car buyers, pre & post COVID pandemic
In 2022, supply chain shortages subdued the new car market with just 1.61 million units registered, signifying a 2% decrease vs 2021. However, there’s hope for growth in 2023, particularly in the electric vehicle market. Meanwhile, the used car market has seen its own ups and downs, with a 15% decline in 2020 followed by an 11.5% growth in 2021. Interested in finding out more? Let’s take a closer look at the twists and turns of the UK’s automotive industry, pre and post pandemic.
Summary
Key new car statistics
- The UK has the seventh-largest new-vehicle market globally, with 1,896,202 new cars and vans registered in 2022.
- China has the largest new car market in the world, registering 25,239,00 new vehicles in 2020. The USA, Japan, Germany, and India follow in ranking.
- The USA experienced one of the largest declines in new vehicle sales due to the Covid-19 pandemic, with a year-on-year fall of 2.5 million vehicles in 2020.
- Toyota is the top-selling car brand worldwide, selling 9.3 million new vehicles in 2020.
- The Nissan Qashqai is the most popular new car in the UK, with 42,704 sales in 2022. Previously, the Vauxhall Corsa was the favorite, which replaced the Ford Fiesta.
- Volkswagen is the best-selling vehicle brand in the UK, with 131,850 new car sales in 2022, beating Ford, which was previously the top-selling brand.
- Ford is the most popular brand for used cars in the UK, holding an 11.92% share of used car sales in 2021, followed closely by Vauxhall (10%) and Volkswagen (8.80%).
- Grey is the most popular car colour in the UK, followed by black and white.
- Demand for plug-in electric passenger cars in the UK has significantly grown, from 2.2% in 2014 to 16.6% in 2022, which means more than one in 10 new cars sold in the UK were electric.
- In contrast, demand for diesel passenger cars in the UK has plummeted, from 50% in 2014 to just 5.1% in 2022.
Source: heycar.co.uk
Car sales statistics in the UK and worldwide
New car sales
First, let’s talk about new car sales. In 2022, the number of new passenger cars being bought and sold in the UK hit record lows, with only 1.61 million new cars registered – that’s around 700,000 fewer than pre-Covid levels. And only adding to this, new passenger car sales were already down by 28.7% on pre-pandemic levels in 2021!
Why?
- The global semiconductor shortage
- The ongoing conflict in Ukraine
These have both had an effect on supply chains and made it harder for car manufacturers to produce and sell new cars.
It’s estimated that around two million car registrations have been lost since the start of the pandemic, which is a huge blow to the industry.
Good news!
But there is some good news. January 2023 saw a sixth consecutive month of growth for the UK new car market, with registrations increasing by a significant 14.7%. That means a total of 131,994 new cars were sold, which is definitely cause for celebration. The Society of Motor Manufacturers and Traders (SMMT) is also predicting improved growth in 2023, with electric cars leading the way. However, this is dependent on a few factors, including more investment in the nationwide charging infrastructure.
Source: SMMT.co.uk
Used car sales
Moving on to the used car market, things have been a bit up and down. In 2020, the used car market fell by 15% compared to the previous year, with 6.7 million cars sold. In 2021, things improved, with the market growing by 11.5% compared to 2020 and a total of 7.5 million cars sold. However, this was still 5.5% below the pre-pandemic five-year average.
In the first quarter of 2022, used car sales grew by 5.1% compared to the same period in 2021, with 1,774,351 cars changing hands. The second quarter of 2022 saw a significant decline in the used car market, with sales down 18.8%. This brought the total number of sales for the first half of the year down 8.3% compared to 2021 and 12.8% behind pre-pandemic levels in 2019. The third quarter of 2022 also saw a decline in the used car market, with sales down 12.2% compared to the same period in 2021.
Source: SMMT.co.uk
How does the UK compare globally?
Finally, let’s take a look at how the UK stacks up against the rest of the world. Globally, the UK is the seventh-largest market for new vehicles, but it could be pushed into eighth place by passenger car ownership in Brazil. China takes the top spot, buying around 25 million new cars every year, followed by the USA, Japan, Germany, and India.¹
Looking ahead to 2023: What can we expect?
According to the SMMT, new-car registrations increased by 18.3% compared to the same time last year, with 128,462 units sold in December 2022.
However, despite strong underlying demand, pandemic-related global parts shortages resulted in an overall 2% decline in new-car registrations for the year, with only 1.61 million units sold. This is around 700,000 units below pre-COVID levels, and the strong performance in recent months has not been enough to offset the declines recorded during the first half of 2022.
In amongst new-car markets in Europe, the SMMT also highlights that Britain has now become Europe’s second largest new-car market by volume, surpassing France for the first time since 2019.²
Source: autovista24.autovistagroup.com (SMMT)
The forecast
The cost of living is still high, and even though the supply of goods is improving, there’s still a shortage of semiconductors which may affect manufacturing throughout 2023. The Bank of England increased interest rates by 0.5% to 3.5% and the average energy price cap will go up from £2,500 to £4,500 in April 2023. Unemployment is also expected to rise.
The new car market is uncertain, but it’s predicted to grow by 13.3% to 1.83 million units in 2023, which is still lower than in 2019. Supply chains are stabilising, but the shortage of semiconductors may still cause problems.
Basically, things are getting better in some ways, but there are still challenges ahead, like the semiconductor shortage and high prices.³
Diesel: No longer so popular
So, let’s break down what’s been going on in the world of car registrations in the UK. In June, the government put an end to the Plug-in Car Grant (PiCG), but manufacturers were still delivering the latest zero-emission cars in high demand. This caused BEVs to have their biggest market share ever in December, accounting for an impressive 32.9% of new cars registered that month. Throughout the whole year of 2022, they made up 16.6% of new registrations, overtaking diesel to become the second most popular type of car after petrol.
On the other hand, PHEVs only had a small YoY increase of 0.4% in December, with their share falling to 6.5% for that month and 6.3% for the entire year, following the trend seen in Europe. However, EVs made up almost 40% of new cars registered in December and 22.9% throughout the whole year.
Interestingly, HEVs had the fastest YoY growth rate of all powertrains in December, with a 58.1% increase and a market share of 10.7%. They made up 11.6% of the market in 2022, which pushed diesel (including mild-hybrid diesels) down to fourth place.
In a nutshell, despite the government pulling the plug on the PiCG, new electric cars are still flying off the shelves due to limited supply. BEVs are becoming increasingly popular, while HEVs are growing fast and pushing diesel cars down the ranks.⁴
Source: SMMT.co.uk
Fair taxes and charging infrastructure
More and more people are ditching their petrol-guzzling cars and switching to electric vehicles (EVs). But, this has caused some headaches for governments who rely on taxes from gasoline to fund their projects. To make up for the loss of revenue, they’re considering reducing incentives for EVs and taxing them more.
Switzerland’s planning to start taxing EVs and the UK government’s announced that they’ll stop giving them a free pass on vehicle taxes from April 2025. This means that EV drivers will have to pay their fair share of taxes, just like everyone else who uses the roads.
But, some experts are worried that this will discourage people from buying EVs. The SMMT has said that making EVs more expensive will hurt their adoption. Especially as the charging infrastructure in the UK is not yet sufficient to support a large number of EVs.
The UK government has acknowledged this and has said that they’ll need to install many more charging points in the coming years to support the growing number of EVs on the road. The SMMT agrees and thinks that the government needs to do more to encourage people to switch to EVs. They suggest that providing more information and support for private buyers would be a good place to start.
In short, while EVs are becoming more popular, there are still many challenges to overcome. Governments need to find ways to support their adoption without discouraging people from buying them. Car manufacturers and charging infrastructure providers need to continue innovating to make EVs more practical and accessible for everyone. So, let’s hope that we’ll soon be seeing more and more EVs on the road! ⁵
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