New car supplies in the UK should improve over the next 12 months as OEMs respond to the growing number of Chinese brands launching in the UK, according to Alex Wright, managing director of Shoreham Vehicle Auctions.
OEMs risk losing valuable sales and market share if they do not increase their production capacity as brands like MG offer value for money petrol and EVs cars in dealer stock or with minimal delivery delays.
MG reported a 66.8% increase in sales in the UK in 2022 to 51,050 cars, more than established brands such as Skoda, Citroen, and Honda and just 1,200 cars behind Peugeot.
MG is also offering buying terms to leasing and rental companies which will further accelerate sales as both sectors continue to struggle to source new cars due to ongoing supply challenges. Wright expects the growing number of Chinese manufacturers to offer similar levels of value and availability.
“OEMS will have to decide whether they want to protect their market share and compete with the new Chinese brands that have a very strong proposition and product availability,” explained Wright.
“When supply improves it will reignite new car sales as well as ease the pressure on the used market,” he added.
Wright also cites some used car prices being on par with new cars as another current challenge.
“Currently, consumers have the option of buying a brand new fully warranted new car on competitive finance or a three-to-four-year-old used car for the same price outside the manufacturer’s warranty. It reminds me of when Daewoo launched in the UK and its new prices were more in tune with used cars,” said Wright.
“OEMs have increased new car prices to help get around this anomaly, but due to inflation used prices are likely to remain high for the foreseeable future. The same type of used cars we sold at auction in 2018 for £9,000 are now selling for £18,000 which gives you some idea of how the market has moved in recent years,” he added.