Higher household costs shaping new car demand

Responding to SMMT new car registrations data for September:

Chris Knight, Automotive Partner, KPMG UK, said:

"Car makers are still working their way through the backlog of orders that have built up as a consequence of supply shortages, but higher household costs are shaping new demand.  

"As consumer credit becomes more expensive due to higher interest rates, we expect to see a fall in the average price paid for new vehicles, whilst some consumers will delay buying a new car altogether.  For existing customers facing increased outgoings, some will question the affordability of their car payments.

"Manufacturers are working hard not to pass their own cost increases onto customers in the form of higher prices. Whilst lower cost brands may feel this combination of factors presents opportunity to grow market share."

Responding to SMMT car manufacturing data for August:

Richard Peberdy, UK Head of Automotive, KPMG, said:

“A gradual easing of global supply shortages, plus government support on energy costs, will aid UK car production in the coming months.  But inflation is driving up input costs, and a weakening pound threatens to do so further.

“Passing costs to the consumer is becoming increasingly challenging, although at this stage manufacturers still continue to have busy order books to work their way through.”

ENDS.

Media contact:

Steven Reilly-Hii, Media Relations Manager, KPMG LLP

E: steven.reilly-hii@kpmg.co.uk

T: 07510 376635.