Reuters: Chip shortages in 2022 will further impact the UK car market

According to Reuters, an industry group said on Thursday that the global shortage of semiconductor chips will continue to affect UK car sales this year and 2023 after severely weakening car supply in 2021.

Source: Reuters

The Association of Automakers and Traders (SMMT) said about a sixth of new cars sold in the UK in 2021 will be battery electric (BEV) or plug-in hybrid (PHEV), with the total number of new car registrations up a little by about 1 percentage point to 1.65 million units, compared to 1.63 million units in 2020.

SMMT CEO Mike Hawes said: "This year is not a good year, it follows an equally bad 2021," referring to the impact of chip shortages on sales, which has hampered recovery after the pandemic.

From brake sensors to power steering to entertainment systems, the shortage of chips has led automakers around the world to cut or suspend production, pushing up the price of new and used cars amid strong consumer demand.

Hawes said a car needs an average of 1,500 to 3,000 chips.

"We think the demand is still there, the demand is still strong," Hawes said. He added that there is a widespread belief that the chip shortage will disrupt the market during 2022, which will "continue into 2023."

Before the latest wave of COVID-19, SMMT had forecast UK car sales of 1.96 million units in 2022, below the uptime rate of about 2.3 million units.

SMMT said all-electric BEVs accounted for 11.6 percent of sales in 2021 — more than the cumulative sales from 2016 to 2020. In December, BEV accounted for about a quarter of UK car sales.

PHEVs with batteries and internal combustion engines accounted for 8.9% of sales in 2021.

The UK government plans to effectively ban pure fossil fuel models by 2030. But SMMT said more needs to be done to lower the price of electric vehicles and improve charging infrastructure, especially roadside charging.

Car cost and charging issues, Hawes said, are "the biggest barriers people can consider buying this type of product." We haven't reached our goal yet. (Proofreading/Hidden Lehi)