7:01 am, February 25, 2022
Car manufacturing in the UK sank to its lowest January total in more than a decade in spite of an increase in EV production, new figures out today (Feb 25) show.
Almost 68,800 cars left factories in January, which was down by a fifth on 2021 and the worst figure for that month since 2009, said the SMMT.
Production for overseas and domestic markets fell by 17.5 per cent and 30.8 per cent respectively.
Battery-electric vehicle production went up by a third, though, with one in 11 cars rolling off factory lines being zero-emission.
When plug-in hybrids and hybrids are factored in, EVs accounted for more than a quarter of last month’s output.
The SMMT said the global shortage of semiconductors was still hitting production, as was the changeover of some popular models.
Exports comprised more than eight in 10 cars made, with the EU remaining the largest destination for UK-manufactured cars.
It took 59.1 per cent of exports, followed by China (10.4 per cent) and the US (10 per cent).
SMMT chief executive Mike Hawes said: ‘It’s another torrid start to the year, as global supply issues and structural changes squeeze output while model changes impact production scheduling.
‘The UK automotive manufacturing industry is, however, fundamentally strong, and recent investment announcements are testament to the potential for growth, not least in terms of rising EV production.
‘Long-term recovery can only be delivered, however, if global competitiveness is assured, and for that we must address both inflationary and fixed costs, most obviously escalating energy prices, but also fiscal and trading costs.
‘Every measure must be taken if we are to secure a bright, electrified future for our world-class automotive manufacturing base and the high-skilled, high-value jobs it creates across Britain.’
Independent expectations for UK car production this year have now been revised down from the autumn outlook by 2.4 per cent to some 979,000 units.
What the industry says
Cost-of-living squeeze may hit demand
Overall volumes are still lower than pre-pandemic and will remain so until chip supply shortages are resolved.
But car manufacturers will be pleased that 2022 has begun with healthy demand for the vehicles they are producing, much of which are higher-margin models.
However, they will be pondering whether the cost-of-living squeeze, which includes rising fuel prices and energy costs, begins to slow the demand that currently outpaces supply.
Richard Peberdy, UK head of automotive, KPMG
Challenging times are not going to go away
The automotive industry’s already weak position is getting more pressured by the day, as the global chip shortage is exacerbated by rising inflation and rising costs making vehicles more expensive to produce. These are not issues that are going to go away overnight and are reflected in the latest downward revision of production figures for 2022. These challenging times are set to continue for the next 12-18 months at least, ramping up the pressure on already struggling car makers.
The biggest – if longer-term – opportunity continues to be in investing in a faster switch to electrification. With the road to 2030, when all new cars sold in the UK and increasingly in other major markets must be significantly electrified, the scale of the opportunity ahead is evident.
Despite some significant announcements, the investment required to be world leaders is far in excess of what has been committed – and the time to make this once in 100 years investment and claim global leadership for generations to come is rapidly passing.
Jim Holder, editorial director, What Car?
