The market for new cars in Northern Ireland ticked higher last year as the strain on global supply chains eased but the market is still some way off regaining its pre-pandemic lustre.
Latest data from industry body the Society of Motor Manufacturers and Traders showed a total of 36,616 new cars were registered in the province for the full year 2022, a 4.8% increase on the previous year but still down 26% on the last pre-pandemic year in 2019. The 2022 figure was boosted by a strong end to the year with December recording a one third annual jump in sales, the highest increase of all UK regions.
The increase was attributed to the fact choked supply chains in the wake of the Covid-19 pandemic have begun to ease, meaning delayed deliveries of new cars are finally being fulfilled.
Richard Ramsey, Chief Economist at Ulster Bank, said the steady increase in new car sales in recent months is largely linked to the fulfilling of orders made back in the third and fourth quarter of 2021. Then, the cost-of-living crisis which has resulted in a hike in interest rates and fall in disposable income, hadn’t begun to take hold and consumer confidence was strong.
The current mood amongst consumers is less rosy so demand is likely to ease this year at the same time as supply is expected to increase. Despite that, new car sales are expected to continue to increase in 2023 as the market recovers from the lows hit during the pandemic.
“2023 should see another year of rising new car sales (and falling second-hand car prices) but getting back to 2019 levels could take a while longer,” Mr Ramsey said, adding that the structure of the market is likely to change.
He expects buyers to opt for smaller, cheaper and more fuel efficient cars given the cost of living crisis. In particularly, those motorists who use leasing or personal contract purchasing (PCP) to finance their cars are expected to downgrade their car choice given the higher costs involved in the current higher interest rate environment.
“Following the global financial crisis and cost-of-living crisis that followed, motorists downsized their cars to smaller, cheaper more fuel efficient models. The car industry duly obliged by providing a wide range of cars (particularly SUVs) to fit everyone’s budget.
“We may see a similar development during this cost-of-living crisis, particularly in relation to smaller electric vehicles. However, whilst cheaper to run these are much more expensive to buy and are reliant on the availability of charging infrastructure.
“And, there isn’t the low interest rate environment that supported motorists through the previous and more modest cost-of-living crisis relative to the current model.”
