British new car sales plunged 22 per cent in August, compared to the same month a year ago.
However, demand for electric and hybrid vehicles surged as the country's transition to green transportation ramps up.
New car registrations suffered the worst August since 2013 with just 68,033 units sold, with the month also 7.6 per cent down against the average recorded over the past decade, according to the Society of Motor Manufacturers and Traders.
It came as the global semiconductor shortage continued to cause challenges for the sector, after similar falls last month when supply challenges and the ‘pingdemic’ of people self-isolating hit demand.
However, August demand for the latest battery electric (BEV), hybrid (HEV) and plug-in hybrid (PHEV) vehicles rose 32.2 per cent, 45.7 per cent and 72.1 per cent respectively.
Mike Hawes, SMMT chief executive, said August is traditionally one of the quietest months for UK new car registrations ahead of the plate-change in September, however the “figures are still disappointing” for the automotive industry.
“The global shortage of semiconductors has affected UK, and indeed global, car production volumes so new car registrations will inevitably be undermined,” he said.
The UK's car market is up about 20 per cent for the first eight months of this year on 2020 with an increase of 1.1 million registrations.
However, the numbers still remain below pre-pandemic levels as the sector contends with semiconductor chip shortages caused by the coronavirus crisis, with total registrations this year down 25.3 per cent on the 10-year average for the January to August period.
The chip shortage has slowed car assembly lines across the globe because new vehicles often include dozens of microchips, also known as semiconductors, with up to $20 billion set to be wiped off global carmakers’ operating profits this year, according to Goldman Sachs.
As a result of the issue, UK car production plunged to its lowest July level since 1956 as the global microchip shortage hit the industry with only 53,438 cars were built over the month.
However, despite the crisis, Britain’s transition to net-zero gathered pace, with demand for greener vehicles significantly up.
BEVs and PHEVs account for 8.4 per cent and 6.6 per cent market share respectively of new cars sold this year.
Meanwhile, sales of diesel cars were down 65 per cent year-on-year in August while petrol sales dropped 40 per cent.
The drop falls in line with the government's plans to shift drivers to electric vehicles before the 2030 ban on the production of new petrol and diesel cars.
Sue Robinson, chief executive of the National Franchised Dealers Association said it was “encouraging” to see that “strong sales of electrified vehicles offset the monthly decline”.
Mr Hawes urged the government to continue supportive Covid measures still currently for the sector, “especially the furlough scheme which has proven invaluable to so many businesses”.
“As we enter the important September plate-change month with an ever-increasing range of electrified models and attractive deals, buyers in the market for the new 71 plate can be reassured manufacturers are doing all they can to ensure prompt deliveries,” he said.