UK car manufacturing has fallen every month for a year

UK car production fell 15.5 per cent in May, marking the 12th consecutive month of decline amid “seismic challenges” for the industry

UK car manufacturing has now fallen every month for a year, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

In May, the number of cars built in the UK dropped 15.5 per cent, with 116,035 cars rolling off production lines up and down the country – 21,239 less than May 2018’s figure of 137,274.

• ‘2018 was the year the car industry went backwards’

This brings the total year-to-date figure for 2019 to 557,295, whereas by this time last year, UK factories had built 705,774 cars – 21 per cent more. The SMMT says this is partially due to manufacturers bringing their annual summer shutdowns forward in anticipation of 29th March 2019 – the date on which the UK was supposed to leave the EU.

Manufacturing for the domestic market fell 25.9 per cent year-on-year from 29,932 in May 2018 to 22,180 last month. The export sector, meanwhile – which makes up 80.9 per cent of the UK car production market – also saw a decrease of 12.6 per cent from 107,342 units produced to 93,855.

SMMT chief executive Mike Hawes described the 12th consecutive month of decline as being of “serious concern”, saying that it underlines his organisation’s belief in the need to avoid a no deal Brexit.

Hawes said the automotive industry is facing “seismic challenges” of a “technological, environmental and economic” nature.

“The ongoing political instability and uncertainty over our future overseas trade relationships, most notably with Europe, is not helping and, whilst 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,” he added.

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

The latest figures from 2019 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.

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