Has the UK Arrived at Luxury Car Real Estate? | | Insurance Plan

New car registrations were at their lowest level for June since 1996. Purchases last month were down 24% compared to the same month last year. On top of that, 110,000 new cars were purchased in June 2022 compared to June 2016. This equates to a significant drop of 45%.

Additionally, sales this year are projected to be less than 1.6 million in 2020, making it the worst since the 1992 recession. No matter how you look at it, people are buying far fewer new cars.

What is going on?

  • Is it the supply chain issues (eg global chip shortages) as reported in The Plan Blog over the past few years?
  • Should I switch to cycling and public transport?
  • Is the increased use of convenient taxis and apps like Free Now, Uber and Bolt reducing people’s reliance on driving?

Is this a supply or demand problem?

Society of Motor Manufacturers and Traders (SMMT) director Mike Hawes says the biggest problem is supply, not demand. He believes that the semiconductor shortage is hindering the new car market more than ever. Worse, he says, than before during the Covid Lockdowns. Ian Plummer from Auto Trader also agrees that the problem is the ‘constant disruption of car supply’.

However, many medical experts believe that there are significant changes underway. Can buying a few cars be the ‘newest thing?’

In 2019, there was a lot of traffic. Also, in the years before the epidemic, there was an increase in the number of kilometers traveled per capita. This is believed by many (including the RAC) to be due to low fuel prices.

However, post-pandemic Britain has never raised its old traffic numbers. There are fewer cars, and people are learning to drive later than before. Even taking into account the increase in delivery vehicles, miles driven on UK roads are down 5% on pre-pandemic levels.

Rising costs, parking insurance premiums and fuel prices are also making car ownership more expensive and less affordable than in recent history. Not to mention many cars are also restricted from entering certain areas due to congestion and bike lanes.

The shift to working from home may play a major role in this as fewer people now rely on cars for travel. So if he only makes a weekly trip to the store (the delivery can now be arranged online) then the driving costs don’t add up. This is especially true if the car was second hand. In that case the car will still be there for the family. In some cases where a family needs to make two trips at the same time, taxi or private rental services can be used more easily and cheaper than driving a car to do this alone. Perhaps economic necessity has made this a worthwhile sacrifice.

Can electric cars save the declining car market?

One area of ​​car ownership that is experiencing a boom is the electric car market. One in six new cars hitting British roads last month was electric.

Sales of fully electric cars outpace sales of diesel cars, which are about half that per year. Diesel now makes up only 10% of the market. Sales of petrol vehicles have also fallen by 16%, although they still represent 57% of the market.

SMMT’s Mike Hawes said the increase in sales of electric vehicles was linked to higher petrol and diesel prices. Although many government incentives to buy EVs have been removed, tax incentives remain. It’s easy to see why they’re so cute right now. Not only are they kinder to the environment and in line with the ever-increasing ULEZ regulations, they also allow motorists to avoid higher fuel prices in 2022.

However, while the rise of electric vehicles is promising, it may not be enough to bring the industry back to its former glory. Even electric cars that don’t rely on the most expensive fossil fuels in history are still valuable to potential customers. Electricity is also expensive, and rising prices are putting a strain on everyone’s wallet. The cost of repairs and other damages may become more expensive for people in 2022.

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