Car industry on the road to recovery as sales increase by 5%

Economist warns supply now holding back market

January to June of 2021 remained the second-weakest first six months of any year since the SMMT records began

Margaret Canning Twitter Email

July 06 2021 07:42 AM

Car sales in Northern Ireland have had their second-weakest half-year since records began, an economist has said.

The latest report on new car sales from the Society of Motor Manufacturers and Traders (SMMT) reported an increase in transactions of 5% month-on-month during June, with 4,075 sold.

And 4,075 was also an increase of nearly one-quarter on June last year, when consumers and businesses remained deep in the economic shock of Covid-19.

Across the year so far, the Ford Fiesta was the most popular car sold in Northern Ireland, with 501 being driven off forecourts.

The Volkswagen Golf followed closely, with 496 sold.

And in June, the Ford Puma was the most popular motor, with 120 sold, followed by the Volkswagen T-Roc, with 112 driven off forecourts.

Ulster Bank chief economist Richard Ramsey said June’s performance was continuing the trend of improvement over the last few months since the latest lockdown eased.

There were 20,848 new cars registered between January and June this year, which was up nearly 40% on the same period in 2020, when car showrooms were shut for much of the time.

Nonetheless, January to June of 2021 remained the second-weakest first six months of any year since the SMMT records began, Mr Ramsey said.

The period was second only to last year’s dire figures for the industry.

But Mr Ramsey said that supply issues meant that the car figures were not reflecting the demand in the economy.

He said: “Last year, the car industry, like other parts of the economy, faced a major demand shock.

“That may have passed but it is the subsequent supply shock that is currently acting as a handbrake on the new car sales recovery.

“Lengthening supplier delivery times is a feature of the car industry alongside many other sectors of the economy.

“A typical new car contains around 1,000 computer chips and these are in short supply.

“Car manufacturers have scaled backed production in line with the availability of key components such as semi-conductors.

“This supply chain disruption is expected to persist for some time.”
Mr Ramsey said that meant that the figures would be understating demand — which was also a trend reflected in markets such as residential house sales and staycations, where there was also a lack of supply.

Across the UK, 186,128 new cars had been sold in June. But the SMMT said that as a 16.4% decline compared with average June totals between 2010 and 2019.

Car industry on the road to recovery as sales increase by 5%

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