Car production cost rising and fleet buying driving new car sales

Responding to the latest SMMT UK car manufacturing data (for October):

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

“Whilst manufacturers are still working their way through the order books that have built up as a consequence of limited new car supply, fresh consumer demand for vehicles is increasingly coming under threat as the cost of living rises.

“The cost of producing cars is rising, with a range of materials more expensive due to inflation, and the industry is nervously awaiting the outcome of the government’s review into energy price support for businesses beyond the end of March.  Exposure to rising energy prices during 2023 would further pressure new car prices and threaten the global competitiveness of the UK automotive industry. 

“The race for countries to be seen as world leaders in electric vehicle production is well underway and the UK’s position for manufacturing cars, vans and parts depends on very considerable investment in battery manufacturing and skills.  At this stage it is not clear where this is going to come from”

Responding to the latest SMMT new car registrations data (for November):

Chris Knight, UK Automotive Partner, KPMG, said:

"With supply shortages gradually easing, the ability to increase production has again been reflected in another month of rising new car sales, largely driven by fleet buying.

“Whilst private car sales saw a small increase for the month, car makers will be nervous about the impact the mounting cost of living crisis has on new car buying ability heading into 2023.”

Media contact:

Steven Reilly-Hii, Media Relations Manager (Industrial Manufacturing, Automotive, and Future Mobility), KPMG, steven.reilly-hii@kpmg.co.uk or 07510 376635.

About KPMG:

KPMG LLP, a UK limited liability partnership, operates from 20 offices across the UK with approximately 15,300 partners and staff. The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.

KPMG is a global organization of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.