Monthly manufacturing figures shows steep decline in February as demand in Asia and Europe wavers; industry calls for Brexit clarity
The number of cars produced in UK factories fell by 15.3 per cent in February compared to the same month last year, with 123,203 new models leaving car plants last month, compared to 145,518 in February 2018. The fall represents the ninth consecutive month of contracting UK car production.
The dropping data, compiled by the Society of Motor Manufacturers and Traders (SMMT), is driven by declining demand both for cars produced for the domestic market (down 11 per cent) and cars built for export (down 16.4 per cent) last month. Year-on-year production is down 16.8 per cent overall, with an 8 per cent drop in domestic demand, and an 18.9 per cent fall in UK-built cars destined for export.
• Ford could lose £613 million as a result of hard Brexit
Car production reached a peak in February 2017, when almost 1.8 million new models rolled out of UK factory gates. This latest drop comes against a gloomy backdrop that includes Nissan deciding it will not produce the X-Trail SUV in Sunderland as originally planned, Honda announcing it will close its Swindon plant in 2021, and the temporary closure of Jaguar Land Rover’s Solihull plant towards the end of last year.
Mike Hawes, SMMT chief executive, said the consecutive months of falling production should “be a wakeup call for anyone who thinks this industry, already challenged by international trade hostilities, declining markets and technological disruption, could survive a ‘no deal’ Brexit without serious damage.”
Calling a managed no-deal scenario “a fantasy”, Hawes warned “business anxiety has now reached fever pitch and we desperately need parliament to come together to restore stability”.
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.”
• UK automotive firms warm of No-Deal Brexit catastrophe
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…
Source: Read Full Article