Following the release of data today by the Society of Motor Manufacturers and Traders (SMMT), showing that the UK new car market was up in August (at +1.2%) for the first time since February;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“Annual market growth – however slight – is obviously welcome and reverses the recent deteriorating trend. However, we still have to bear in mind some important context.

“Firstly, August is one of the smallest months in the annual UK car sales calendar and is a quiet month ahead of the registration plate change in September. September will provide a much bigger indication of the underlying health of the market.

“Second, we are slowly emerging from a situation of unprecedented car supply shortages caused by the global chips crisis. As that crisis gradually eases, the industry is able to meet a backlog of orders for a time. Those backed up sales will support the market for a few months yet.

“Third, as the supply shortages ease, we are back to the underlying demand fundamentals as main car market drivers. With price inflation and interest rates heading up and a looming economic recession for Britain in prospect, new car demand will be weakening later this year and into 2023.

“GlobalData forecasts that the UK car market will decline slightly to a low of 1.6 million units in 2022, with a slow recovery to 1.79 million units next year – still well adrift of the pre-pandemic market of 2.3 million seen in 2019.

“Manufacturers will face major headwinds and a tougher market over the next 18 months. In many respects, August’s market may be seen as the calm before the storm.”