UK car manufacturing drops for twelfth consecutive month

27 June 2019

Car production in the UK fell for the twelfth month in a row in May as the industry continues to struggle with economic and political uncertainty.

Manufacturing fell 15.5% according to new figures released by the Society of Motor Manufacturers and Traders (SMMT). In total, 21,239 fewer cars were manufactured, with demand both in domestic and foreign markets falling by double-digits. Softening in the UK and key global markets, and the effects of model changes, caused the negative performance to continue.

In the month, manufacturing for domestic buyers fell by 25.9%, while overseas orders were down 12.6%. Exports accounted for 80.9% of all cars made, emphasising the importance of maintaining free and frictionless trade.

′Twelve consecutive months of decline for UK car manufacturing is a serious concern and underlines yet again the importance of securing a Brexit deal quickly,’ comments SMMT chief executive Mike Hawes. ′The sector is facing multiple seismic challenges simultaneously: technological, environmental and economic.

′The ongoing political instability and uncertainty over our future overseas trade relationships, most notably with Europe, is not helping and, while the industry’s fundamentals remain strong, a brighter future is only possible if we secure a deal that can help us regain our reputation as an attractive location for automotive investment. No deal is not an option.’

Year down

In the year to date, UK car production is down 21.0%. 557,295 new cars have rolled off production lines – almost 150,000 fewer than in the first five months of 2018. This is due, to a certain extent, to the decision by some manufacturers to bring forward summer shutdowns to April because of the anticipation that the UK would leave the EU at the end of March.

Carmakers, including Mini, Jaguar Land Rover and Honda, closed their factories earlier than usual to undertake planned maintenance, hoping to avoid any potential supply issues and production bottlenecks caused by the UK leaving the EU on 29 March. However, this deadline was delayed two weeks before the date and with no time to reverse these decisions, three of the UK’s biggest manufacturers closed their doors unnecessarily. They could now still face the problems they were trying to avoid with the new 31 October deadline.

Speaking to Autovista Group earlier this month, Hawes indicated that production might not necessarily level out later this year. ′Production was down in April, largely down to Brexit-related shutdowns,’ he said. ′These are planned and scheduled six months in advance and are not something that can be overturned overnight. However, we do not believe that this will completely level out in August, when shutdowns took place last year, due to various circumstances.’

No ′no-deal’ plea

Japan’s Foreign Minister Taro Kono has pleaded with the two UK candidates vying to be the next Prime Minister to avoid a no-deal scenario.

′Please, no no-deal Brexit,’ Kono told the BBC. ′Some companies are already starting to move their operations to other places in Europe.’

Asked whether investment could leave Britain, Kono said: ′It could be that there is going to be less investment.’

Nissan has pulled planned production of the X-Trail from its plant in Sunderland, while Honda is to close its Swindon plant in 2021. Both companies have denied that Brexit is the cause of these decisions, but it is likely to have been a factor to some extent.