After a year of global supply issues and a drop in new car registrations, the new car market is set for even more disruption. This is according to  Cox Automotive Europe, which said there are several factors affecting new car sales that are yet to be fully felt across the supply chain.

The prediction follow the news from the Society of Motor Manufacturers and Traders (SMMT) that new vehicle registrations were down 16.4% in June. Philip Nothard, insight and strategy director at Cox Automotive, believes that further months of disruption will mean the used vehicle market continues to dominate sector growth.

“We’re all very aware of the challenges caused by semiconductor shortages. However, there are even more significant challenges facing the new vehicle market which are likely to contribute to further market decline. For instance, the true impact of Brexit is yet to be felt.

“The automotive industry within the UK and globally is having to change and rethink distribution strategies. This can lead to a delay in the movement of goods into the UK. In addition, there are pending issues facing manufacturers because there will be new vehicle tariffs applied to new cars coming into the country when production does catch up.”

Nothard also believes the pandemic has accelerated the trend towards buying cars online.

“Consumers are increasingly buying online which also extends to cars for those who decide not to follow the traditional sales process in dealerships. The pandemic has given manufacturers and dealers time to reflect on how they sell cars and the increasing ways that it can take place.”

Another key factor has been the increasing popularity of electric vehicles (EVs). The latest SMMT figures showed June’s best-selling new car was the electric Tesla Model 3.

“Manufacturers will be conscious of the imminent introduction of fines for those who breach Corporate Average Fuel Economy (CAFE) regulations – which will push traditional OEMs towards the EV market,” said Nothard.

Nothard believes new car supply pressures are likely to be felt into 2022 and fuel the current used car price boom. However, he predicts that the market will stabilise as winter arrives, furlough ends, and the economy opens.

“It’s a great time to be selling a used car as they will fetch higher prices, but not so much to buy one. Also, it’s also not great news for dealers operating within the current or expanding ULEZ areas in London. Trying to sell a non-compliant petrol or diesel car within this area will be more difficult.”