The automotive market may never return to pre-pandemic levels, as new and used vehicle sales continue to be hit by several headwinds.

Philip Nothard, Cox Automotive’s customer insight & strategy director

The prediction comes from Cox Automotive, which has downgraded its 2022 new car forecast for the UK, citing a 31-million unit global production shortfall.

Published in the latest issue of the Cox Automotive AutoFocus quarterly digital magazine, its baseline scenario sees 2022 end on 1.65 million registrations, up 0.2% year-on-year, but a 13.8% downgrade on its previous forecast. It’s also published an upside scenario of 1.83 million – an 11.2% year-on-year increase, resulting in a 14.1% downgrade – and a downside scenario of 1.51 million, an 8.3% year-on-year decline and an 11.3% downgrade on its previous forecast.

While hopes were high that new car supplies would recover throughout 2022 as semiconductor and raw material supplies steadily returned, the conflict in Ukraine is impacting the automotive supply chain and the entire logistics and distribution network.

But Philip Nothard, insight and strategy director at Cox Automotive, said that even without the Ukraine crisis, the business would have been looking to revise its forecasts. Although there are anecdotal reports that manufacturers have begun to fulfil orders from a supply-starved leasing sector and even reports of tactical registrations – albeit nowhere near pre-pandemic levels – supply has not picked up in the volumes anticipated.

Nothard continued: “Supply headaches also persist from the long-awaited fulfilment of orders made 12 or even 18 months ago. However, there are also reports of this year’s order books already being full, so it’s clear the backlog of orders will only grow, and new orders won’t turn into actual registrations until at least H2 2022 or even into 2023.”

He added: “It is looking increasingly likely that the pre-pandemic automotive market we all knew may never return as the sector continues to be hit by headwinds. Whether it is a growing number of manufacturers switching to the agency model or ongoing supply chain disruption, the UK’s automotive sector looks set for short- to medium-term volatility and may well emerge from this looking completely different to pre-pandemic levels.”

Cox Automotive predicts the industry struggles will continue until at least Q2 2023 and said this will bring a continued supply and demand imbalance in the used vehicle parc.

Nothard also outlined that automotive businesses should look to adapt and transform existing operations to meet changing customer requirements and demonstrate flexibility.

To access the latest issue of the Cox Automotive AutoFocus digital magazine, click here.