UK car registrations grew by more than a quarter last month but are still a long way short of pre-pandemic sales due to the ongoing supply problems experienced by manufacturers, the trade body said on Friday.
Figures released on Friday morning also revealed that Korean maker Kia became the nation’s most-bought car brand in a single month for the first time on record – and its Sportage SUV was the best-selling model.
Some 115,087 new cars were purchased, financed and leased in total in January, which is 27.5 per cent more than the same month a year ago but 22.9 per cent lower than in 2020, according to the Society of Motor Manufacturers and Traders (SMMT).
However, demand for pure electric vehicles continues to surge, with more battery cars registered than diesels and also ahead of both plug-in hybrids and conventional hybrid models in January.
Korean brand Kia became the best-selling car manufacturer in a single month for the first time on record, January figures show
While there was a growth in registrations last month, January figures are still more than a fifth behind where they were before the pandemic took hold of the UK
Industry bosses said they had fully expected to see sector growth last month with year-on-year figures compared to a lockdown-hit January 2021.
Mike Hawes, SMMT chief executive, said this month’s figures ‘were always going to be an improvement’ but added that it was ‘reassuring to see a strengthening market’.
He said the ongoing chip shortage in particular was continuing to impact supply of new cars to the UK, with dealers experiencing plenty of demand but unable to get their hands on vehicles.
January growth was mostly driven by strong appetite from private buyers, with the SMMT suggesting that manufacturers are beginning to prioritise these customers following months of supply constraints.
Kia’s Sportage SUV was the most-registered new car in January, ahead of Ford’s Puma and another Kia, the Niro. Our review of the 2022 Sportage will be published tomorrow
This appears to be the case particularly with Kia, which for the first time on record become the nation’s most-bought make in a single month, with 10,504 registrations in total.
Commenting on the achievement, Paul Philpott, president and CEO of Kia UK , said: ‘These record results are partly down to us having better supply than many, but they also clearly reflect the growing demand for our brand and for our range of new cars, which we have seen progressively increase since last summer.’
The Korean company’s Sportage SUVs became the nation’s most popular new model in January, with sold 3,458 sold during the month.
Some of these are likely to be pre-registered examples of the all-new Sportage, which is now beginning to arrive in the UK – and which we have a full review coming tomorrow (Saturday).
Kia also had the third most-registered car last month, flanking the Ford Puma in second with its Niro in third spot.
Over 14,400 pure electric cars were registered in January as demand grew more than 130%
Pure electric vehicle sales gulfing diesels and hybrids
Many of Kia’s Niro registrations will likely be zero-emission ‘e-Niro’ cars, which would have contributed towards a massive 131 per cent spike in battery electric vehicle (BEV) sales in January.
Some 14,433 BEVs were registered last month, which was ahead of diesels (11,740), plug-in hybrids (9,047) and conventional hybrids (13,492).
It means BEVs account for 12.5 per cent of all new motors bought in the UK.
Karen Johnson from Barclays Corporate Banking said: ‘It appears car manufacturers are making the production of electric cars a priority so this can only be good news for a sector needing to position itself well, not just for the next twelve months, but for the years to come.’
Such has been the growth in demand for greener vehicles – both electric and hybrid – in recent months that the average new car CO2 emissions fell by 11.2 per cent in 2021 to its lowest ever recorded level of 119.7g/km, the SMMT also confirmed today.
‘Once again it is electrified vehicles that are driving the growth, despite the ongoing headwinds of chip shortages, rising inflation and the cost-of-living squeeze,’ the SMMT’s Mike Hawes added.
‘2022 is off to a reasonable start, however, and with around 50 new electrified models due for release this year, customers will have an ever greater choice, which can only be good for our shared environmental ambitions.’
Jon Lawes, managing director at Hitachi Capital Vehicle Solutions, commented: ‘These latest figures illustrate the demand for electric vehicles is only going one way, following a record-breaking year for EV registrations in 2021.
‘With motorists increasingly realising the cost and environmental benefits of EVs, and a growing variety of EV models on the market, we will continue to see healthy EV registration figures and in the coming months we can expect to reach the watershed moment where one in two new cars registered will be an EV.’
Rising cost of living expected to ‘dampen’ new car demand
The trade body now predicts that pure electric and plug-in hybrid sales will grow by 61 per cent and 42 per cent respectively in 2022, meaning that, by the end of the year, almost one in four new cars bought in the UK will have a plug.
Overall, total new car registrations are expected to rise 15.2 per cent on 2021, to 1.897million units. This is a downward revision from October’s outlook of 1.96million, as the ongoing semiconductor shortage, increasing costs of living and rising interest rates are expected to ‘dampen’ some demand in 2022.
It is hard to predict new car sales for the year given a combination of factors, including a growing squeeze on the cost of living and unresolved supply chain issues
Jamie Hamilton, Automotive Director at Deloitte
If these estimations are realised, 2022 would still be down almost 18 per cent on pre-pandemic levels, but the recovery is expected to continue into 2023, with the market projected to climb above two million units for the first time since 2019.
Richard Peberdy, UK head of automotive at KPMG, said demand for new cars remains robust ‘despite household budgets coming under increasing pressure’ following yesterday’s ‘Black Thursday’ announcements that will see energy prices soaring for millions.
However, he warned the rising cost of gas and electric could also see ‘car makers face their own cost challenges and the pressure to increase prices is building’.
Jamie Hamilton, automotive director and head of electric vehicles at Deloitte, added: ‘It is hard to gauge what January 2022’s results signal for the year ahead given a combination of factors, including a growing squeeze on the cost of living and unresolved supply chain issues.
‘It may not be until well into the second half of the year that we can more accurately establish what the baseline is for UK car sales.
‘The good news for manufacturers and dealers is that supply pressures caused by the semi-conductor shortage are starting to ease. Global markets – most notably the US and China – saw a rebound in car sales at the end of 2021, with reports of a similar story in automotive production in East Asia and Mexico.
‘The point at which supply issues are fully resolved, it’s likely we’ll see substantial pent-up demand released in the UK, which bodes well for the industry’s prospects in 2022.
‘Until then, rising prices, especially in the used car sector, have meant some manufacturers and dealers have been able to offset the impact of declining volumes on their bottom line.’
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