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UK car production falls by more than a fifth in first six months of year

Time 12:01 am, July 31, 2019

BRITISH car manufacturing output fell by more than a fifth in the first half of 2019, according to figures released today by the Society of Motor Manufacturers and Traders.

The industry body also reported a 15.2 per cent fall in June, marking the 13th consecutive month of decline,

A total of 666,521 cars rolled off production lines in the first six months – a year-on-year loss of 168,052 units owing largely to falling demand in key markets, including the UK, exacerbated by factory shutdowns pulled forward in anticipation of the March Brexit deadline.

In June, output for the UK rose by 2,791 units following an anomalous 47.2 per cent decline in the same month last year when preparation for the new WLTP emissions test affected volumes. The underlying trend, however, remains downward, with year-to-date production for the domestic market down by 16.4 per cent.

Meanwhile, the number of cars built for export fell by 19.8 per cent in June and by 21.0 per cent in the first half of the year, with just over half a million units shipped overseas, given softening of key overseas markets and global trade tensions. Exports to the sector’s top global markets fell by double digits, with the US down 12.9 per cent, China down a massive 53.1 per cent, Japan 10.5 per cent and Turkey a whopping 93.0 per cent.

Demand in the UK’s biggest market, the EU, also fell – by 15.6 per cent. However, the EU still accounts for 57 per cent of all UK car exports – the highest first-half dependence since 2016.

Source: SMMT

The news comes as new SMMT research, also released today, reveals the substantial cost to the industry of ‘no deal’ Brexit preparations.

At least £330 million has already been spent by the sector on contingency plans. Most major UK manufacturers have tied up working capital stockpiling materials and components, securing warehousing capacity and investing in new logistics solutions, additional insurance and training in new customs procedures.

Significantly, many manufacturers moved annual plant shutdowns from the summer to April – a measure that can’t be repeated for the proposed October departure date.

Meanwhile, latest figures show inward investment into the sector effectively stopped in the first half of the year. From January to June, newly pledged investment was down more than 70 per cent to £90 million, contrasting with the average annual investment figure of £2.7 billion over the previous seven years.

Mike Hawes, SMMT chief executive, said: ‘Today’s figures are the result of global instability compounded by ongoing fear of ‘‘no deal’’. This fear is causing investment to stall, as hundreds of millions of pounds are diverted to Brexit cliff-edge mitigation – money that would be better spent tackling technological and environmental challenges.

‘The industry’s foundations are fundamentally strong, however, and we’re ready to work with the new government to build on these through the industrial strategy.

‘We need an internationally competitive business environment to encourage more investment, more innovation and more growth. That starts with an ambitious Brexit deal that maintains frictionless trade, and we look to the new administration to get a deal done quickly so manufacturers can get back to the business of building cars and helping deliver a brighter future for Britain.’

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