New car sales rise for third successive month in October

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The UK new car market posted a third straight month of growth in October, but experts warn that rising inflation and economic stagnation will derail the industry’s recovery from the pandemic.

According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), 134,344 new cars were registered in October, 26.4 percent more than the same month last year.

The trade association attributed the increase to the partial fulfillment of “strong order books”, with Britons having to endure long waits – sometimes as much as a year – for their new vehicles due to supply shortages.

However, industry insiders have warned that rising inflation impacting the value of financial deals, higher mortgage rates, rising utility bills and rising fuel and food prices will strangle car sales into 2023 and possibly beyond.

Farewell Fiesta: Some 134,344 new cars were registered in October and the Ford Fiesta returned to the top of the sales charts in the month it was confirmed to be phased out next year

The SMMT took into account last month’s surge in registrations by acknowledging that October’s results are compared to a “particularly disappointing” October 2021.

The total number of new cars registered so far this year is a third below pre-coronavirus levels, mainly due to low vehicle availability due to shortage of parts, especially regarding semiconductor chips.

Ford’s Fiesta returned to the top of the sales charts in the month when the automaker confirmed that the hugely popular model will be phased out in June 2023, ending 47 years of uninterrupted production of the supermini.

Ford confirmed last month that it will stop making the Fiesta in June 2023, ending 47 years of continuous production

Ford confirmed last month that it will stop making the Fiesta in June 2023, ending 47 years of continuous production

The Nissan Qashqai was the second most bought new car last month, meaning it has topped the Vauxhall Corsa's 2022 sales charts.

The Nissan Qashqai was the second most bought new car last month, meaning it has topped the Vauxhall Corsa’s 2022 sales charts.

The popularity of the Nissan Qashqai is great news for the Northeast, with the SUV built at the Japanese manufacturer's factory in Sunderland

The popularity of the Nissan Qashqai is great news for the Northeast, with the SUV built at the Japanese manufacturer’s factory in Sunderland

The 4,230 Fiestas bought in October will add to the more than 1.5 million already on UK roads, with the small Ford being the best-selling car in the country.

Second in the sales charts was the Sunderland-built Nissan Qashqai SUV, with 4,228 sales.

It has now overtaken the Opel Corsa as the most bought new car in Britain in 2022, a welcome boost for the Northeast.

SMMT chief executive Mike Hawes said October’s results are “very welcome” but “still not enough to offset the damage done by the pandemic and subsequent shortages of supplies.”

He remained optimistic about demand for electric cars, which he believes could help see the market, although the forecasted turbulent 12 to 18 months ahead, with the cost of living squeeze pushing consumer spending.

However, he warned that this can only be achieved with a comprehensive and reliable charging infrastructure.

“The outlook for next year shows recovery is possible and EV (electric vehicle) growth will continue, but to reach our shared net-zero targets, that growth must accelerate and consumers must be given every reason to invest.” , he said.

“This means giving them the economic stability and confidence to make the switch, with the assurance that they can charge – and affordably – when needed.

‘The models are here, there are more to come; the public charging points too.’

Ginny Buckley, founder of the website Elecrtrifying.com, said people shouldn't read too much into October's EV sales statistics, as battery car registrations are greatly affected by the timing of shipments to the UK from major brands such as Tesla, Kia and MG

Ginny Buckley, founder of the website Elecrtrifying.com, said people shouldn’t read too much into October’s EV sales statistics, as battery car registrations are greatly affected by the timing of shipments to the UK from major brands such as Tesla, Kia and MG

Registrations of all-electric new battery-powered cars grew by less than the overall market for the first time since the pandemic, up 23.4 percent.

The year-over-year market share of the cars fell for the first time since May last year, from 15.2 percent to 14.8 percent.

Ginny Buckley, an electric car expert and founder of the website Elecrtrifying.com, said people shouldn’t read too much into the October statistics: “Electric car registrations are hugely affected by the timing of shipments to the UK from major brands such as Tesla, Kia and MG.

“We know that large numbers of electric cars will arrive in the UK over the next two months and will be shipped directly to eager buyers.”

Jim Holder, editor-in-chief of What Car?, says the latest rate hikes will eventually lead to more expensive financing plans for new car buyers, which could curb appetite.

He added: “The economic environment is moving away from the direction the industry needs it to take, and this is becoming increasingly problematic for manufacturers who need to invest in new electric vehicle plants and expand their range of electric vehicles to meet the demands of the industry. government-imposed goals.

“While electric vehicle sales continue to grow, rising energy prices and living costs are making it harder for some to make the switch.”

Chris Evans, head of sales at Heycar, adds that rising interest rates and the highest mortgage rates we’ve seen in 14 years are making consumers ‘much more cautious’ when it comes to their next big purchase.”

Industry analysts welcomed news of an increase in car sales in October, but gave gloomy outlook for the coming months as the cost of living will constrain consumer spending

Industry analysts welcomed news of an increase in car sales in October, but gave gloomy outlook for the coming months as the cost of living will constrain consumer spending

Jamie Hamilton, Deloitte’s auto market analyst, adds that he has already noticed a decline in appetite for cars.

The SMMT numbers come at a time of rising interest rates – the base rate reached 3 percent this week – which will make the cost of financing a new car more expensive and could weaken demand as many consumers postpone large purchases.

This also comes as manufacturers begin to emerge from microchip shortages and supply chain issues.

“According to the Deloitte Consumer Tracker, only 4 percent of consumers plan to buy a car between now and the end of the year.”

“In some areas it is becoming clear that inventory sales are taking markedly longer, with dealers advising on strong price promotions.”

David Leggett, automotive analyst at GlobalData, says Mr Hawes’ expectation of a market recovery in 2023 is unlikely.

“There are major headwinds in demand for households and businesses and the latest assessments of the UK’s economic growth prospects are bleak,” he told This is Money.

GlobalData predicts that the UK car market will struggle to reach 1.6 million this year, with just 1.7 million new car sales by 2023.

At that level, the UK new car market in 2023 would still be about a quarter below the 2.3 million sales of 2019.

“I am concerned that there is a weak recovery ahead for the sector with very difficult trading conditions for at least the next 18 months.”

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