Fleet impacted as car makers adapt to supply challenges

Responding to SMMT’s March (and Q1) car manufacturing data.

Responding to SMMT’s March (and Q1) car manufacturing data.

Chris Knight, Automotive Partner at KMPG, said:

“Component and material availability challenges remain, with the problems caused by the pandemic now added to by conflict in Ukraine.

Car production volumes remain below pre-pandemic levels, but manufacturers have adapted, profiting from focus on a buoyant electric vehicle market, and prioritising components into higher-margin cars generally.  Inflation driving up production costs further compounds this approach.

Once the market eventually moves beyond these constraints and stabilises, a continued focus on such high margin production will likely be at conflict with maintaining market share - particularly with increased, and lower-cost, competition emerging.

 

“A focus on prioritising available components and materials into higher-margin vehicle production and sales has been to the detriment of some parts of the fleet industry.

But with rental and leasing markets beginning to recover as travel and commuting again increases, leasing companies will be looking at which manufacturers have, and haven’t, supported them during these challenging times.  An increase in hybrid working may of course change the nature of company car schemes forever and lead to less miles driven, but in turn it could drive more consumers, whether supplemented by a vehicle allowance or not, to look at rental options as an alternative to ownership.  This was a trend we were already seeing pre-pandemic, particularly in urban areas and amongst younger consumers.  And the tightening cost of living squeeze will only increase the number of people assessing whether short or medium term rental or leasing is a more affordable model for them than buying a vehicle.”

ENDS.

Media contact:

Steven Reilly-Hii, Media Relations Manager, KPMG LLP, E: steven.reilly-hii@kpmg.co.uk, T: 07510 376635.

 

About KPMG:

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

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