Following the Russian invasion of Ukraine last February, the general direction of travel for the UK and Northern Ireland economies has been down. Consumer confidence has plunged in the wake of rocketing inflation and the evolving cost-of-living crisis. Despite this deteriorating consumer outlook, new car sales ended the year on a high – at least in relative terms. The improvement in new car sales largely reflects an easing in the supply-chain disruption that has blighted global car manufacturers since the pandemic struck. Consumer sentiment and confidence in supply-chains (shorter-delivery times) are moving in opposite directions. The steady increase in new car sales in recent months is largely linked to fulfilling orders made in Q3 and Q4 2021. Back then the cost-of-living crisis had barely begun and interest rates were still plumbing record lows. In short, consumer confidence was robust.

Prior to the pandemic, new car sales used to be a useful and timely barometer of consumer confidence. But the supply chain disruption following Covid-19 and the Ukraine-Russia war ended that. The latest month’s new car sales are, in many cases, a reflection of consumer demand and confidence prevailing in the summer of 2021. The reality of consumer confidence today is severely dampened by the omnipresent cost-of-living crisis and higher interest rates.