Car manufacturing down 12.9% as UK demand divesMon, 08/10/2018
Official statistics have shown that fewer cars have been manufactured last month in the UK year on year.
Hugo Griffiths, Auto Express, reports:
The number of cars built in the UK fell by 12.9 per cent in August compared to the same month in 2017, with 13,184 fewer vehicles produced.
A total of 89,254 cars were made in the UK last month, down from 102,438 in August 2018. The decline was driven by a 38.8 per cent drop in the number of cars made for the UK domestic market. Fewer than 10,323 cars produced in the UK in August 2018 went to local buyers. The number of cars built for export fell by 2,861, which represents a 3.8 per cent decline.
The figures were released by the Society of Motor Manufacturers and Traders (SMMT), whose chief executive, Mike Hawes, said the summer months are often marked by production fluctuations due to “annual maintenance and re-tooling shutdowns”. Hawes added, however, that August 2018’s result was exaggerated by the introduction of the new WLTP emission-measurement system standards, which saw the industry “racing” to get cars recertified.
Hawes also said the majority of the UK’s exported cars heading to EU countries “underscores the importance of a Brexit agreement to safeguard this trade”.
August’s results echo July’s falling figures, which saw production for the domestic market drop by 35 per cent, and 11 per cent fewer cars produced overall. Year-to-date figures show production falling by 5.2 per cent, with 18.6 fewer cars built for the domestic market in the first eight months of 2018.
Last year saw 1,671,166 vehicles roll off UK production lines, down three per cent on the record year of 2016 when the industry achieved its highest production numbers in 17 years.
The SMMT blames the three per cent drop in manufacturing output on a fall in domestic demand and economic uncertainty – domestic vehicle registrations were down 5.7 per cent last year, with production earmarked for the UK market down by 9.8 per cent.
Of the 1.67 million vehicles built, 79.9 per cent were exported with the European Union being the biggest buyer of UK built vehicles. Exports were down 1.1 per cent compared to last year.
The SMMT says the Government needs to urgently reach a post-Brexit transition deal: “This means maintaining the UK’s membership of the single market and customs union and addressing critical details that, if ignored, could have a damaging effect on the industry’s competitiveness.”
While overall vehicle manufacturing was down, engine production in the UK reached record high levels with 2.72 million produced, up 6.9 per cent on 2016. The SMMT says the growth is a result of recent investment into low-emission petrol and diesel engines in the UK. Of the 8,000 people employed in engine production, 3,550 are directly involved in diesel production.
However, the trade body warned that continued uncertainty over diesel policy in the UK will impact the sector. SMMT chief executive, Mike Hawes said: “Concern over the future of diesel is having an effect on total production.”
While the engine manufacturing sector has benefitted from recent investment, the SMMT said overall investment in the UK’s automotive sector is down. Last year saw £1.1 billion invested in the UK’s automotive sector, down from £1.66 billion in 2016 and £2.5 billion three years ago.
The SMMT says part of the drop-in investment can be explained by Brexit, with manufacturers and businesses delaying investment until the UK’s trade relationship with the EU is confirmed. Hawes added that the though the drop-in investment is “significant” investment is “cyclical.”
Hawes said: “The UK automotive industry continues to produce cars that are in strong demand across the world and it’s encouraging to see growth in many markets. However, we urgently need clarity on the transitional arrangements for Brexit, arrangements which must retain all the current benefits else around 10% of our exports could be threatened overnight.
"We compete in a global race to produce the best cars and must continue to attract investment to remain competitive. Whilst such investment is often cyclical, the evidence is that it is now stalling so we need rapid progress on trade discussions to safeguard jobs and stimulate future growth.”
The car manufacturing industry is a key part of the British economy, and although the 12% drop in production isn’t industry threatening, it does reflect the changing buying habits of British motorists.