New car supply challenges will persist throughout 2022, warns KPMG

New vehicle supply challenges will persist in the automotive industry throughout 2022, warns analyst KPMG.

Figures released by the SMMT at the end of November showed UK car production had declined 41.4% in October – the fourth straight month of decline and the weakest October since 1956 as firms grappled with the global shortage of semiconductors which led to production stoppages.

In October, Fleet News reported that fleet operators and company car drivers faced delays of more than one year for certain new car and van models, while others are being delivered with missing features.

Richard Peberdy, UK head of automotive at KPMG, said: “Frustratingly for manufacturers and consumers alike, 2022 will start with the same supply shortages that have limited production throughout 2021.

“Despite investment going into increasing chip production, the backlog of demand for the variety of sectors and goods that require them means that supply challenges will persist in the automotive industry throughout 2022, albeit these will probably ease as the year goes on.

“As component supply issues ease, production will increase to meet pent-up vehicle demand.

“But I’d argue that we are entering a ‘new normal’ for car manufacturing and we won’t again see the levels of over-production and discounting that we did pre-pandemic.

“Instead, manufacturers will focus volume on more profitable vehicles and markets. 

“Demand will change too and in light of sustainability concerns and hybrid working, consumers will be rethinking what they drive and how they access and pay for mobility more widely.”