British car sales declined to more than half in May compared with the same month in 2019, as global chips shortage sets in.
Britain’s economic recovery fumbled in May when growth slowed to 0.8% after a boost from the reopening.
The global chip shortage substantiated a roadblock on the “journey to recovery” for UK car sales last month. With new registrations still below pre-pandemic levels despite an upright increase compared with 2020 figures.
The SMMT says that this indicates the intensity of the challenge faced by the industry as it seeks to recover from the pandemic while wrestling with global supply shortages.
Every car and van-maker is being affected by the computer chip situation. With delivery times for cars stretching from three to six months, many new vans are not expected to be delivered until 2022.
Despite the huge demand from consumers for new vehicles, the industry strived to fulfill demands because of the chip shortfall, which estimates to strike production levels well into the second half of the year.
Car Sales dynamics owing to chips shortage:
The Office for National Statistics (ONS) said the manufacturing industry is hit by computer chips scarcity, which forced car companies to cut short the production.
As a result, transport equipment production dropped by 16.5% in the previous month. It’s the largest fall since April 2020 and the worst period of the coronavirus pandemic.
Shortages of timber and steel, combined with harsh weather conditions, brought many building projects to a deadlock. The standstill led to the construction sector shrinking for a second consecutive month by 0.8%.
Meanwhile, UK car production continues to dominate export, with 83.6% of all cars manufactured in 2021 shipped overseas.
The European Union remains by far the most important destination for British cars. Taking 56.0% of all exports, followed by the US (18.3%) and China (7.3%).
Volkswagen chief executive, Herbert Diess, said last month: It was in “disaster mode” over the shortage. Adding to that, he said, the consequence would amplify and smash profits in the second quarter.