UK car manufacturing output was down almost a fifth in the first half of 2022 due to a fall in overseas demand, according to new figures from the industry’s trade association, the Society of Motor Manufacturers and Traders (SMMT).
The SMMT states that the year-to-date decline was driven largely by a fall in export volumes, with 23.9% fewer cars produced for overseas markets during the first half of 2022.
Exports account for nearly 80% (78.6%) of all UK car production output, with more than 60% of exports bound for the EU. Shipments to the bloc decreased by 10.6%, with deliveries to the US also down 56.1%.
Challenges
SMMT chief executive, Mike Hawes, likened 2022 to a bout of ‘long Covid’ for car manufacturers facing global component shortages, pressurised supply chains and other challenges.
Jim Holder, editorial director of magazine What Car? magazine, echoed this analysis.
“Output remains below pre-pandemic levels, and with the ongoing semiconductor shortage, energy crisis and the war in Ukraine, it’s unlikely that will change for some time,” Holder said, as reported in Car Dealer magazine.
UK car plants will not return to producing one million vehicles a year (a figure last reached in 2019 with 1.3m vehicles) until at least 2025, two years later than expected, reports the FT.
“Sky-high energy costs, non-competitive business rates and skills shortages must all be addressed if we are to build on our inherent strengths and seize the opportunities presented by the dash for decarbonised mobility,” Hawes said.
Trade data
SMMT data, gathered independently by automotive research firm Auto Analysis, revealed a dip of 19.2% to 403,131 units produced for the first half of 2022 - 95,792 fewer than in the same period last year.
The car industry has managed to avoid recent problems at Dover by shifting to other ports such as Immingham in Lincolnshire and Southampton, reports the Guardian.
Safety check extension
Hawes said the sector was still affected by Brexit. The SMMT has asked the government for a deadline extension to new post-Brexit safety checks required for every model sold.
The government has given an 18-month deadline to bring in a new regime but has not yet produced the regulation to govern it.
Recovery to follow
However, the latest independent outlook predicts a 1.2% uplift in overall output this year, with firmer recovery to follow as supply chain issues recede.
Hawes said that while “key model changeovers and the closure of a major plant last year have also impacted output, but there are grounds for optimism with rising output over the last two months”.
Manufacturing rose in the months of May and June, as demand for vans and new models lifted output. Production of vans from the Stellantis plant in Luton, increased 47% and Jaguar Land Rover said it has an order book of 200,000 vehicles, the highest in its history.
Electric future
The SMMT wants the UK to make two million electric vehicles a year by 2040, an ambition that would require current factories to expand and new battery factories to open.
Battery electric vehicle production increased by 6.5% during the first half of the year with £3.4 billion investment committed to UK’s zero emissions future, the SMMT said.
