Following the release of data today by the Society of Motor Manufacturers and Traders (SMMT), showing that UK car the car market in January surged by 27.5% on last year;

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

“It’s important to note that the healthy-looking January gain is against a lockdown market last year and that the market currently remains around a fifth lower than pre-pandemic levels.

“There are big challenges for the UK car market ahead in 2022 on both the supply-side and demand-side.

“Semiconductor shortages continued to create short-supply to the UK car market last month and while the global chips supply crisis is expected to ease later this year, it will continue to constrain sales for many manufacturers.

“On the demand-side, UK households will be squeezed this year by rising prices for many consumer goods and other items – especially energy bills, a major area of uncertainty due to skyrocketing wholesale gas market prices. Retail price inflation in Britain is expected by the Bank of England to peak at more than 7% in April, inevitably putting a squeeze on real incomes and depressing sentiment.

“The UK’s car market is forecast by GlobalData to reach 1.9 million sales in 2022 with a return to a pre-pandemic ‘norm’ of over 2 million annual sales not expected until next year, with 2.2 million car sales forecast for 2023. Market improvement also assumes current supply-side issues are mainly resolved amid a backdrop of relative stability and sustainable growth for both the UK and the global economy.”