Rising living costs slam the brakes on car sales

THE crisis in the British car industry has intensified as a shortage of parts and the cost of living bite.

In a bleak update, the Society of Motor Manufacturers and Traders (SMMT) said 124,394 new cars were registered last month – down 21pc on a year earlier and the second worst May since 1992.

Sales have been in hit by a shortage of semiconductors and disruption to the supply chain despite steady demand. But experts warned that demand is now also softening as households struggle with rising costs, including the price of fuel.

James Fairclough, chief executive of car search website AA Cars, said: ‘Things are going from bad to worse. As the cost of living crisis begins to bite, and consumers simultaneously grapple with surging fuel, energy and food prices, some are opting to postpone bigticket purchases like a new car.’

Chris Knight, a partner at KPMG, said: ‘A rising cost of living poses questions for the UK industry for the rest of 2022. How many consumers delay purchasing a vehicle altogether is a key question.’

The SMMT said battery electric vehicle sales were up nearly 18pc in May – one in eight new cars on the road. Its chief executive Mike Hawes said more must be done to encourage drivers to buy electric cars.

He said: ‘This requires an acceleration in the roll-out of accessible charging infrastructure.

‘Delivering on net zero means renewing the vehicles on our roads at pace but, with rising inflation and a squeeze on household incomes, this will be increasingly difficult unless businesses and private buyers have the confidence and encouragement to do so.’