Cox Automotive revises 2023 new car market forecast to reflect global pressures

Cox Automotive has adjusted its quarterly and 2023 full-year new car market forecasts to reflect the ongoing headwinds facing UK automotive, stemming from macro issues such as the post-pandemic recovery, the war in Ukraine, and the emergence of new and aggressive market entrants.

In the seventh instalment of its quarterly AutoFocus digital automotive insight update, Cox Automotive has revised its initial new vehicle market forecasts for the year. In addition, AutoFocus sets out an upside, baseline, and downside scenario for 2023.

In its upside scenario, Cox Automotive predicts the year will end on 1.77 million registrations, a +15.6% increase year-on-year, -23.1% down compared to the 2000-2019 average, and -23.1% down compared with the most recent pre-pandemic 2019 performance. This represents a -15% on the previous forecast.

The revised baseline for 2023 sees the year ending on 1.68 million registrations, +9.5% up year-on-year, -27.1% down compared to the 2000-2019 average, and -27.1% compared to the most recent pre-pandemic 2019 performance. This represents a -10% downgrade on the previous forecast.

Cox Automotive has downgraded the worst-case scenario for the year by -7%. As a result, the company expects 1.55 million registrations, a +1.3% increase year-on-year, -32.6% down compared to the 2000-2019 average, and -32.6% down compared to the most recent pre-pandemic 2019 performance.

Production line shutdowns, part shortages and global supply chain disruptions 

The automotive industry continues to feel the impact of the pandemic. Raw material supply shortages and rising prices continue to hit production, affecting vehicle production capacity and reducing the potential margins manufacturers can make.

Philip Nothard, Insight & Strategy Director, Cox Automotive, explains: "I discussed in the last issue of AutoFocus that there are 31 million fewer cars produced in the two years following the global lockdown than in the same period before. Considering the challenges that still exist today around global production in the manufacturing space, this is set to rise to closer to 40 million over three years, if not more.

"It was previously predicted - or hoped - that the production of new vehicles would return to normality by the end of 2022. But unfortunately, many manufacturers indicate this won't be the case until at least the second or third quarter of 2023. This a worrying thought, but I should caveat that supply has improved marginally this year, particularly for specific makes and models, and that manufacturers continue to find new ways to source the vital materials they need to drive supply up."

Not only are the knock-on effects of the pandemic continuing to put a strain on automotive supply chains, but the political and economic turbulence from the war in Ukraine is also resulting in shockwaves for supply chains and the global economy, driving inflation and increasing costs, which are being passed onto customers.

China's influence in Europe 

Nothard commented: "Chinese brands continue to gain a strong foothold in the UK, and it's only a matter of time before they become a significant presence in terms of sales. China is already the world's largest body of the electric vehicle market, with over 1.3 million units sold annually, representing 40% of sales worldwide.

“Europe, of course, is slowly moving towards a greener future. Still, for this, we will need more electric vehicle-centric manufacturers providing the clean cars legislation, and consumer demand necessitates – perhaps Chinese brands present an additional solution."