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David Borland, EY UK & Ireland Automotive Leader, comments on SMMT new car registration figures for February 2023:
“There were almost 75,000 new car sales in February, which was a significant year-on-year increase of over 26%, and continues the trend of recovery from pre-pandemic volumes, with the seventh consecutive month of growth. However, the sector continues to grapple with a lack of availability of critical components, supply chain disruptions in key markets, the effects of geopolitical tensions and the impact of the cost of living on consumer confidence.
“February’s sales numbers also showcased the rising popularity of electrified vehicles with sales of battery electric vehicles increasing over 18% month-on-month, accounting for 1 in 6 of all sales. Despite the increase in EV adoption, the slow pace of the charging infrastructure roll out is a concern for the industry as the gap between EVs and charging infrastructure continues to grow. To support the government’s target of ending the sale of new internal combustion engine cars by 2030, continued and increased focus on charging infrastructure will be required. Whilst the government has previously announced several funds to support the roll out of infrastructure, including last month’s announcement that £56m worth of support is being made available for local councils to deliver up to 2,400 charge points, these have not yet had the intended effect on the pace of the roll out. While this is likely to help bridge the disparity between charger availability and consumer needs, further support is likely necessary.
“Demonstrating the continuing significance and impact of regulation, the EU sales ban on combustion engines starting in 2035 received late objections from Germany, which is looking for assurances on the role e-fuels can play. This appears to be another sign that the markets believe decarbonisation requires a portfolio of solutions.”
Manu Varghese, from EY’s UK & Ireland Advanced Manufacturing & Mobility Team, adds:
“Following the recent news that two major automotive manufacturers will be reducing their workforces as part of restructuring action, it is imperative that auto workers reskill and new talent pools are created as the industry transitions to an electrified future.”
Forward Look
“The new plate month of March 2023 is a key month in the automotive calendar, not least because of the release of the new ‘23’ plate that replaces the ‘72’ plate that was released in September 2022. It is also the month in which the Chancellor of the Exchequer announces the Spring Budget. To deliver on the government’s growth ambitions for the auto industry, a number of initiatives will be required, including tax and other incentives, supported by stronger regional industrial strategies as part of the levelling up agenda.”