UK new car sales have been projected to pick up in 2021, but not to return fully to pre-pandemic levels.

The prediction comes from the third annual Automotive Insight Report from auto services organisation Cox Automotive and accountancy firm Grant Thornton.

It says that while new car sales will increase from a projected 1.57 million in 2020 to 2.02 million in 2021, the latter figure will still represent a 12.8% decline on the average figure between 2001 and 2019.

The forecasts are said to have been informed by analysis of market response after the financial crash in 2007/8, as well as nuanced considerations of Brexit, Covid-19, and global vehicle supply issues.

A survey of car dealers carried out for the report found that 52% of dealers expected registrations to decline in 2021, and 42% expected a further decline in consumer confidence.

The survey also found that 33% of dealers believed new car supply would increase, while 27% thought the opposite.

The report also considers the used car market, for which 6.41 million transactions are predicted by the end of 2020, a shortfall of more than one million compared with initial forecasts.

For 2021, 6.66 million transactions are predicted – again a shortfall compared with a 7.4 million average between 2001 and 2019.

Cox Automotive insight and strategy director Philip Nothard said: “While the COVID-19 pandemic has been – and continues to be – a significant challenge for the automotive sector, the idea that we have experienced anything ‘normal’ for the past 15 or even 20 years is a falsehood. 

“The reality is there has very rarely been a long period of stability before external forces made their presence known.

“If we are suggesting there is no such thing as normal, the other key factor that remains true is that consumer behaviour is underpinning industry paradigm shifts. Whether we talk about digital transformation, electrification, connectivity or, indeed, responding to the short-term market shocks, the driving force for industry change is the consumer behavioural response.” 

Grant Thornton UK associate director Owen Edwards said: “The global automotive industry is rapidly adjusting to changes triggered by numerous sources: Covid-19; political and economic shifts; changes in emissions legislation; pressure from shareholders to generate more value; and increased consumer demand. 

“Reducing cost will be a priority for many business leaders – in the short and the long term – and this will create an ongoing conflict between costs and the need to make profits. 

“Continued consolidation is expected across the whole automotive industry to achieve economies of scale by building increasingly large companies, or operational efficiency to become more vertically integrated.”