New car supply challenges cost aftersales sector £600m

The decline on new cars sales, caused by the coronavirus pandemic and the semiconductor shortage, in the last two years is estimated to have cost the aftersales sector £600 million.

SMMT new car registration figures highlight the significant decline in new car sales so far in 2021, leaving franchised dealers with a predicted service and repair shortfall of £300 million.

Gavin Ruddick, non-executive director of BookMyGarage.com, said: “Last year, demand for new cars plummeted due to the Covid-19 pandemic, which we estimated would cost the aftersales segment £300 million in lost revenue.

“Demand for new cars has since recovered but now manufacturers are facing significant supply challenges and the SMMT’s data indicates sales in 2021 could be similar to last year. That means the cost to the aftersales sector could now be a combined total of £600 million, calculated from the near two years of a 30% reduction in new cars supplied into dealership groups, and impacting the vital revenue from segment 1 (0-3 year old cars).

“This is why now more than ever our sector needs support in finding innovative ways of filling spare workshop capacity which is automated and supports the administration and personnel challenges all sectors are currently experiencing.”

New car sales are down by 29.3% so far in 2021 compared to 2019 (pre-Covid), following a challenging year for manufacturers to keep production lines moving.

The pandemic proved to be a problem at the beginning of the year with supply chain problems, social distancing and self-isolations playing a large role in slowing down production. While it does not play as much of a role in the decline of new car production now, the semi-conductor chip crisis continues to be a contributing factor to the lack of new car registrations.

With the zero- to three-years-old parc shrinking in consecutive years, there are now far fewer vehicles to service.