11:00 am, June 25, 2021
Ongoing supply shortages such as the semiconductor crisis are harming UK car production despite the fact numbers have increased in the last month, new research shows.
Figures show that almost 55,000 cars rolled off the production lines at British factories in May, compared to just 5,314 in the same month a year ago.
However, the number is still down by over 50 per cent on May 2019 – before the pandemic hit.
The Society of Motor Manufacturers and Traders (SMMT) said so far this year UK factories have built 429,826 cars, up 105,063 from 2020.
Despite this, the figures still fall short on the same period in 2019 by a worrying 22.9 per cent.
Alternatively fuelled vehicles now account for more than one in five cars built this year, with one in 16 being battery electric.
The SMMT says the figures show the scale of the challenge facing the industry as it seeks to recover from the pandemic while grappling with global supply shortages, notably of semiconductors.
Moves have recently been made to ease the ongoing crisis, with Bosch announcing plans for a new factory to make the much-need microchips.
Manufacturing of electrified vehicles is increasing while car production generally continues to be export-led, with 83.6 per cent of all cars built in 2021 shipped overseas.
The European Union remains the most important destination for British cars, taking 56 per cent of all exports, followed by the US (18.3 per cent) and China (7.3 per cent).
Mike Hawes, SMMT chief executive, said: ‘May’s figures continue to look inflated when compared to last year’s near total standstill of production lines.
‘The recovery of car production is, however, still massively challenged here and abroad by global supply shortages, particularly semiconductors.
‘If the UK is to remain competitive, therefore, it must ensure it has a globally attractive policy framework for both vehicle production and the supply chain.
‘Accelerating zero emission car production is part of this package, so while one in five models made here this year is alternatively fuelled, we need to drive investment in research and development, charging infrastructure and the market to ensure we can deliver the net zero future society demands.’
Car production up on Covid-wrought 2020 but still down -52.6% on 2019
Similar trend seen in production year to date, as some 127,469 fewer cars built since January than in the same period in 2019https://t.co/eoS9Yzy9LD pic.twitter.com/vBdJHVZTtU
— SMMT (@SMMT) June 25, 2021
‘Shortage has potential to match Covid-19 disruption’
One industry expert fears that the ongoing crisis could still become an even bigger issue for the industry.
Jim Holder, editorial director, What Car?, says the semiconductor shortage could even rival the pandemic for its ‘disruption and intensity’.
He has called for more investment to be made if the industry is to survive this latest threat.
‘The latest industry figures continue to show the UK car manufacturing industry is recovering from the Covid-19 pandemic,’ said Holder.
‘Though manufacturing figures are still down on pre-pandemic levels, the news is encouraging, in particular as electric vehicle production continues to increase.
‘While the UK’s first battery manufacturing plant has now been confirmed, more investment is needed if the UK is to remain a home of manufacturing and assembly for electrified vehicles in the future.
‘A more immediate concern for the industry remains the current microchip or semiconductor shortage that is impacting both vehicle supply and trim levels, which in return is affecting whether buyers opt for new or used models.
‘Our own research of 1149 in-market used buyers found 29 per cent were originally in the new car market, but have switched to the used market in search for lower prices and better stock availability.
‘The ongoing shortage has the potential to match Covid-19 for its disruption and intensity, as there is no quick or easy fix in sight and highlights the weaknesses of even the most robust global supply chains.’
A spokesman for the Department for Business, Innovation and Skills added: ‘We are committed to ensuring the UK continues to be one of the best locations in the world for automotive manufacturing and we’re doing all we can to protect and create jobs.
‘We are securing a competitive future for the sector through a major investment programme of up to £1 billion to support the electrification of the auto supply chain, including the development of gigafactories in the UK.’
