Car Industry Sees a Disastrous May


It is a worrying time in the car industry right now coming off the back of the second-worst May in 30 years – second only to May 2020 at the start of the COVID-19 pandemic. Car sales fell by a fifth compared to a year earlier with registrations plummeting by 20.6% year on year. So, what is causing this serious issue in the auto industry? Keep reading to find out more.


Interestingly, the demand for new and used cars has been high ever since the first lockdown with many households able to save more money during this time. Demand may have been high in recent times, but this could change with the rising cost of living putting a squeeze on household finances and it is likely that many will be delaying any big-ticket purchases in the coming months, which could only make the situation worse. Many are looking to lease as an alternative, which can be a good option but it is important to arrange contract hire gap insurance.

Supply Issues

Instead, it is supply that is the issue and there are a few factors that are creating supply issues. The global chip shortage – referred to as chippagedon – is one of the driving factors behind the shortage of cars. At the start of the pandemic, chip manufacturers slowed production in anticipation of the disruption and this brought production of cars (and many electronics) to a grinding halt. Despite recommencing production, it is thought that the shortage could last into 2024 and continue to cause significant supply issues.

There are other issues with supply as well. Wire harnesses that are used to bundle cables together to control different systems are in short supply with many car manufacturers sourcing these items from Ukraine, where production has been halted as a result of the Russian invasion.

The Future

So, what does this mean for the future of the car industry? Like in many industries, it is hard to predict what the future holds with a number of issues impacting the industry. These include (but are not limited to) inflation and the rising cost of living, the global chip shortage, the Russian invasion of Ukraine and Brexit. Despite all these issues, there are some positive signs in the electric car market. Electric car sales are on the rise with many motorists looking to make the switch to protect the planet and reduce their costs, especially with the rising cost of fuel.

The car industry is struggling right now with supply issues significantly impacting production and sales. This is due to a number of different factors and it is hard to see the picture improving in the short term, especially with so many different issues impacting production. Despite this, there are signs of life when it comes to the electric car market and this is a reason to be optimistic.

The latest stories