UK Car Market Is Struggling: The UK car market is struggling right now with manufacturing dropping by a nearly third, according to SMMT. In addition to this, the sale of new cars is falling rapidly with sales slumping by almost a fifth in May. Obviously, the pandemic has played a role in this, but the issue runs deeper than this and hopes that the industry would be recovering by now have been dashed with the latest figures along with the rising cost of living likely to lower demand in the coming months.
So, what are the reasons that the UK car market is struggling? This post will highlight a few of the main issues.
Supply Chain Issues
The main reason that the car industry is struggling is supply chain issues. Most notably, this includes the global chip shortage which has halted the production of cars and it is thought that this shortage could continue to cause problems as far as 2024. This has brought production to a grinding halt and many people are now having to wait for 6+ months for a new car.
Rising Cost of Raw Materials
The rising cost of raw materials is another reason why the UK car market is struggling. Raw material availability has been hit as a result of a number of issues, including the pandemic, the Russian invasion of Ukraine and Brexit. As a result, the cost of raw materials has increased and placed a greater strain on manufacturers.
Electric Cars Taking Pole
Interestingly, the electric car revolution is thriving and is one of the few bright spots in the auto industry. New car registrations are falling, but the sale of electric cars is rising with motorists looking to reduce their environmental impact as well as lower their car running costs. There are now all kinds of electric cars to choose from and the charging infrastructure and battery technology has improved, so issues like range anxiety are no longer a problem.
Increase in Demand for Used Cars
Another reason that the sale of new cars is plummeting is the fact that people are shopping in the used car market instead. The rising cost of living is having a big impact on people’s finances and many are turning to used cars as a way to save money when they require a vehicle. This is likely to continue with the rising cost of living looking like a problem that could be around for a while. Motorists will also be looking to products like car gap insurance as a way to protect their investment.
It is a perilous time in the UK car market right now with production a major issue and sales figures plummeting. There are a number of serious issues affecting the UK car market and it is likely that this will continue to be a problem in the short term.