Worst decline in UK new car sales since 1940s in ‘lost year’ of 2020

Car registrations fell to 1.63 million last year, down 29% from 2019

New cars are parked at a dockyard in Grimsby, England. The bulk of the lost sales last year occurred during the first lockdown last spring when showrooms and factories closed. Reuters

UK new car sales suffered the biggest fall since the 1940s in 2020, as Covid-enforced showroom closures took their toll on the motor industry.

New car registrations fell to 1.63 million last year, a decline of 29 per cent on 2019 and the biggest annual percentage drop since the Second World War, the Society for Motor Manufacturers said on Wednesday.

The bulk of the lost sales occurred during the first lockdown last spring when showrooms and factories closed.

“2020 will be seen as a ‘lost year’ for automotive, with the sector under pandemic-enforced shutdown for much of the year and uncertainty over future trading conditions taking their toll,” said Mike Hawes, SMMT’s chief executive.

“We lost a million units from March, April, May – and we never recovered them.”

The Covid-19 crisis has cost the car industry £20 billion ($27.2bn) in lost revenue, the trade body said, as well as £1.9bn in VAT receipts for the government.

A 10.9 per cent decline in new car sales in December wrapped up a turbulent 12 months, which saw demand fall by 680,076 units to the worst sales figure since 1992 when the UK was in recession. It was also the first time the number has fallen below the 2-million mark since the global financial crisis in 2009.

The third lockdown across England and tough restrictions elsewhere in the UK will have a further dampening effect on the industry, SMMT warned,

“While click and collect can continue to provide a lifeline, it cannot offset the impact of showroom closures,” the trade body said.

Despite falling demand, petrol and mild-hybrid vehicles made up 62.7 per cent of registrations, while diesel and mild-hybrid diesel cars comprised a fifth of the market share.

However, battery and plug-in hybrid electric cars had a bumper year, accounting for more than one in 10 car sales, up from about one in 30 in 2019. Demand for battery electric vehicles (BEVs) grew 186 per cent to 108,205 units while registrations for plug-in hybrids (PHEVs) rose 91.2 per cent to 66,877.

More than 100 plug-in car models are now available to UK consumers with manufacturers scheduled to deliver a further 35 to the market this year – a higher figure than the combined tally of new petrol and diesel models entering the market in 2021.

SMMT said the government must attract significantly more investment into battery factories to safeguard Britain’s car manufacturing industry, with four times the current number of gigafactory projects planned needed to meet post-Brexit electrification targets.

The UK will ban sales of new petrol and diesel cars from 2030, a decade earlier than previously planned, after Prime Minister Boris Johnson set out 10-point plan for a “green industrial revolution” in November.

Under the new proposals, the government will invest £1.3bn in creating more electric vehicle charging points in homes and streets across England, and make £582 million available in grants for people to buy zero or ultra-low-emission vehicles.

Mr Hawes said growth in demand for electrified vehicles will help to drive the industry’s recovery, along with the rollout of vaccines and clarity over the country's new relationship with the EU.

The UK-EU trade deal has ensured the automotive industry has avoided "a catastrophic 'no deal' scenario", SMMT said. With seven out of 10 new cars registered in the UK in 2020 imported from Europe, the continuation of tariff- and quota-free trade is "critical".

“We must make 2021 a year of recovery,” Mr Hawes said. “With manufacturers bringing record numbers of electrified vehicles to market over the coming months, we will work with government to encourage drivers to make the switch, while promoting investment in our globally-renowned manufacturing base – recharging the market, industry and economy.”