The motor industry is enduring a ‘pressure cooker’ of demand following months of limited new car availability caused by the global semiconductor chip shortage, a new study claims.

Vehicle manufacturers have struggled with limited production outputs ever since Covid put nations in full-scale lockdowns in March 2020. Continuing difficulties to access the computer chips has seen some brands delay their order delivery estimates by as much as a year.

This has almost “vaporized” brand loyalty with more drivers willingly switching to other marques if they can provide vehicles sooner than their favourite manufacturer, according to a survey of nearly 2,500 car buyers.

Car buying dilemma is 'vaporising' brand loyalty: Experts say vehicle makers and dealers who communicate openly about stock will likely hold on to the most customers

The car buying dilemma is ‘vaporizing’ brand loyalty: Experts believe that dealers and vehicle manufacturers who are open about stock will retain the most customers

Autovia reports that consumer hopes of purchasing a car within the next 12 months is at an all-time high. However, with no end in sight for production issues buyers could struggle to get new models for months. 

The 2,445 potential buyers surveyed expressed frustration at the delays due to shortages of new models and the knock-on effects on vehicle prices. 

Auto Trader reported that October saw a 19th consecutive month in which second-hand motor values grew, with prices increasing a record 25.6 % year-on. 

It not only marks the largest monthly jump in growth recorded, up from 21.4 per cent in September, but such is the recent acceleration in prices, the average price of a second-hand car has increased nearly £3,000 in just five months, rocketing from £13,973 in May to £16,878 in October. 

Only one in four motorists polled said they had made a purchase of a car in the past six months.

This is why drivers are suggesting that buyers are becoming increasingly frustrated with their brand loyalty. Nearly half of all buyers say they are considering alternatives to their current brands due to inability to find their usual choices.

This means that the brands hardest hit by shortages of semiconductors are likely to lose a lot in custom.

Vehicle makers have been struggling with limited production outputs since Covid sent nations into full-scale lockdowns around March 2020

Vehicle manufacturers have struggled with limited production outputs ever since Covid put nations in full-scale lockdowns in March 2020

Autovia’s research found that 41% of people are looking to buy a vehicle in the next 3 months. This compares with the previous record of 12% in November 2017. 

The study’s findings were released just a day after official October figures showed that new car registrations had fallen at the lowest level in 30 year.

In October 1991, there were fewer passenger models sold than ever before. Year-on year registrations fell by a quarter.

Mike Hawes (CEO, Society of Motor Manufacturers and Traders) stated that sales statistics reflect a ‘challenging supply constraint, with the industry battling semiconductor shortages and increasing economic headwinds as inflation increases, taxes rise, and consumer confidence has weakened.

The SMMT has downgraded its annual forecast by 8.8 percent following a fourth consecutive month with falling sales. It now estimates that only 1.66 million new cars will be on the roads in 2021. 

Some 106,265 new cars entered the road last month, which is a 24.6% decline on October 2020 and the lowest recorded sales for the tenth month for three decades. SMMT has now downgraded its annual forecast by 8.8%, estimating that just 1.66m new cars will be registered

Last month saw 106,265 new vehicles on the roads. This is a decrease of 24.6% from October 2020, and the lowest monthly sales in three decades. SMMT has now reduced its annual forecast by 8.8% and estimates that only 1.66m new vehicles will be registered.

John Webb, the head of automotive data at Autovia, stated that the disruptions in the past two years have reversed our normal pattern for data on car-buying intentions.

“Despite the frustrations that resulted in 72% not finding the right car at the right cost over the past six-months, half of those we questioned still believe they will find a car soon. That number rises to 69% when it comes to purchasing a car over the next six months.

“We’re seeing a demand cooker in a market that still cannot hope to satisfy consumer desire. Many commentators are predicting that production problems will continue into 2022. 

“Perhaps the most important finding in our data is the fact that nearly half of all potential buyers are willing to change their car.

“This is a red flag for brand loyalty as motorists are likely switch makes to find the same size and body style they were looking for.

Webb says that dealers have ‘big opportunities’ to win conquest sales by communicating openly with potential customers about vehicle stock availability.

He added: “There are two types businesses that will emerge out of these troubled times with the strongest advantages; those who are the fastest to solve their supply issues, and those who are able nurture relationships with delaying customers until they are able supply them.”


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