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In the News

Recession Watch: New Car Sales and Production Slump

Geoff Riley

10th August 2022

New car sales and production are falling in the UK - further evidence of a growing risk of recession.

Many see the car market as a leading indicator for the macroeconomy. A drop in new sales feeds through to lower production and output throughout the vehicle supply-chain. The number of new cars sold in the UK was down by 10% in June 2022.

Why are new car sales dropping?

  • Production delays – global semi-conductor shortage
  • Falling real incomes – new cars have a positive income elasticity of demand
  • Rising interest rates – makes an unsecured car loan more expensive to finance
  • Steep drop in consumer confidence
  • Rise in petrol & diesel prices and a continued climb in average car insurance costs
Recession Watch: New Car Sales and Production Slump

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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