UK car manufacturing suffers eighth consecutive month of decline

UK car manufacturing fell by just over 18 per cent in January as a result of model changes and falling demand

The number of cars built in the UK fell significantly in January, with an 18.2 per cent decline in production. Cars built for the export market bore the brunt of that drop, with 21.4 per cent fewer UK-made cars going to foreign homes.

January’s sharp drop in productivity represents the eighth consecutive month in which manufacturing contracted, with the industry branding the continued falls a “serious concern”.

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Some 120,649 cars rolled off the production line last month, compared with 147,507 in January last year, according to the Society of Motor Manufacturers and Traders (SMMT).

In terms of specific markets, demand from China and EU27 countries fell 72.3 per cent and 20 per cent respectively.

The number of UK-made cars going to UK homes saw a drop of 4.8 per cent, from 28,234 to 26,868, with political uncertainty over Brexit being blamed for further damage to consumer confidence.

Mike Hawes, chief executive of the SMMT, said the figures were of “serious concern”. He cited “falling demand in key markets”, “escalating global trade tensions” and “the need to stay at the forefront of future technology” as three key challenges faced by the industry.

Hawes added the threat of a no deal Brexit is “monopolising time and resources”, thus “undermining competitiveness”.

UK car manufacturing and investment hit by “deeply depressing” decline

January’s figures follow a “deeply depressing” decline of 9.1 per cent in 2018, the same year investment in the UK automotive industry fell by a “disturbing” 46.5 per cent.

Some 1.52 million cars were built in the UK in 2018, a 9.1 per cent decline on the previous year, when 1.67 million left factories. While production at MINI plants rose by 7 per cent, Vauxhall saw a 15.9 per cent fall in the number of cars it produced in the UK, with Nissan down 10.7 per cent, Toyota down 10.4 per cent and Jaguar  Land Rover witnessing a 15.6 per cent production reduction.

Brexit-related uncertainty, diesel downturn, regulatory changes, model cycles, market stagnation in Europe, and slowdown in China have been cited amongst the reasons for the manufacturing slump.

The biggest concern for UK automotive, however, which employs around 856,000 people across the wider industry, is the fall in investment witnessed last year.

The chief executive of the Society of Motor Manufacturers and Traders (SMMT), Mike Hawes, said: “The most disturbing feature of the figures is about automotive investment. Last year, total automotive investment was £588.6 million for the year. The previous year was about £1.1 billion. The year before that it was about £1.6 billion. If you look at a running average over the last three or four years, it’s about £2.5 billion. We had some good years coming out of the recession where it reached £5 billion, so to be down at £588.6 million shows investment is effectively stalled.”

Hawes placed blame for the stalled investment firmly at the feet of Brexit: “We know uncertainty is the big enemy of business. We need a deal.” He added the industry was on “red alert” for the threat of no deal, adding: “Brexit uncertainty has already done enormous damage to output, investment and jobs.”

Declining investment is “also about sentiment”, Hawes added. “You can be very competitive and have all the right positions…but do you feel confident about investing in the UK for the longer term? You might be competitive now, but do you feel welcome as an investor, and do you feel confident about the positions?”

In an attack on those who considered a no-deal Brexit feasible or desirable, Hawes said: “There are new proposals coming out politically every day. Issues around ‘no deal can be managed’ – for us, that is a fantasy.” Asked about ‘project fear’, Hawes simply explained that “the numbers give a lie to that…investment figures, production figures; if it’s project fear, we’re doing a good impression of it being a reality.”

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Addressing the idea that German car companies would put pressure on their government for fear of losing UK sales, Hawes said “Utter, utter nonsense. They’ve been there.”

Asked if there were a sense that confidence and investment had caused irreparable damage to the UK car industry, Hawes said while we were not at the point, he suspected we were “very close…there’s exasperation…there’s an on-going uncertainty…We haven’t reached the point of no return but, at some point, you will reach it.”

Turning to another common refrain among those who see Brexit as opening up new trade deals, Hawes said: “When we leave, we still have to operate with our biggest market by far under the rules Europe sets. At the moment, we have a seat at the table, we can influence those rules. The other major regulatory hub is obviously Washington. Should we do a free trade deal with America? I can’t ever see us having a seat at the table. They set their rules.

What do you think of the “deeply depressing” UK car manufacturing decline? Let us know in the comments below…

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