New car sales down by a quarter on pre-pandemic levels

Sales of new cars remain down by a quarter on pre-pandemic levels as the global shortage of computer chips limits supply.

The Society of Motor Manufacturers and Traders (SMMT) said 58,994 new cars were registered in February.

That is up 15% on the same month last year when showrooms were closed due to coronavirus lockdowns.

But the total was 25.9% below February 2020, before the virus crisis affected new car sales.

Registrations continue to be restricted by the global shortage of computer chips.

Ian Plummer, director at automotive classified advertising business Auto Trader, said there are “signs of pent-up demand that could really set the market on fire later this year”.

He went on: “Speak to any manufacturer or motor retailer, and they’ll tell you that the market is red-hot and that their order books are full to bursting for months to come.

“Last month Auto Trader saw the volume of new car enquiries increase 44% on the same period last month.

“The car industry’s well-documented issues with semi-conductor shortages have so far acted as a brake on the demand of an army of would-be buyers with Covid savings.

“But as production ramps up again that dam looks set to burst later this year as new deliveries pick up speed.

“Order books are rammed until at least September.”

The number of pure electric new cars registered last month nearly trebled year-on-year, taking a market share of 17.7%.

The SMMT urged the Government to reform VAT rules for electric vehicle (EV) charging as energy costs continue to soar.

VAT on domestic electricity is 5% whereas motorists using on-street chargers must pay 20%.

That means people whose homes do not have off-street parking pay four times as much VAT to recharge their EVs than those who can top up their batteries while parked on a drive or in a garage.

SMMT chief executive Mike Hawes said: “Despite February’s traditional low registration numbers, consumers are switching to EVs in ever-increasing numbers.

“More than ever, infrastructure investment needs to accelerate to match this growth. Government must use its upcoming Spring Statement to enable this transition, continuing support for home and workplace charging, boosting public chargepoint rollout to tackle charging anxiety and, given the massive increase in energy prices, reducing VAT on public charging points.

“This will energise both consumer and business confidence and accelerate our switch to zero emission mobility.”