By Nick Carey

LONDON (Reuters) – British new car sales fell to their lowest level since 1992 last year as manufacturers struggled against pandemic-related parts shortages, but could grow 15% in 2023 as those supply-chain issues ease, an industry body said on Thursday.

The Society of Motor Manufacturers and Traders (SMMT) said that according to preliminary figures, British new car registrations fell 2% to 1.61 million units last year, about 700,000 units below the pre-pandemic total hit in 2019.

The global auto industry has struggled with shortages of parts over the last two years, in particular semiconductor chips, with manufacturers focusing production on more profitable models and reporting lengthy order books for new cars.

SMMT Chief Executive Mike Hawes said despite rising inflation and a cost-of-living crisis hitting British consumers, the group was “reasonably confident” in its 2023 growth forecast.

We do expect this year to be one of recovery,” Hawes told reporters during a briefing on Wednesday. “We’re going to look counter cyclical, but that’s because we never recovered from the effects of the pandemic.”

Fully electric, or battery electric, vehicles (BEVs) made up 16.6% of sales in 2022, up from 11.6% in 2021.

British new car registrations rose 18% in December, the fifth consecutive month of growth. BEVs made up almost one third of sales in December.

The UK government has proposed a zero-emission vehicle (ZEV) target that 22% of any manufacturer’s car sales must be BEVs starting in 2024.

But some carmakers like Volkswagen unit Bentley – which has committed to be fully electric by 2030, but will not have a BEV model until 2025 – complain this would penalize them after their production plans have already been set.

The SMMT’s Hawes said the car industry is waiting for a final regulation from the UK government this summer, but added “most manufacturers will want some sort of flexibility” in how the mandate is applied.

(Reporting by Nick Carey; Editing by Jan Harvey)