UK car manufacturing collapses to 65-year low

Britain’s car factories are producing their lowest number of vehicles since the Suez crisis in 1956.

A global shortage of microchips, the “pingdemic” and traditional summer holiday shutdowns at car plants meant that only 53,000 vehicles were produced in July, 37 per cent down on the same month a year earlier, when the country was coming out of the first pandemic lockdowns.

On a rolling annual basis, Britain is producing just over a million cars a year. Before the decision to leave the European Union in 2016, the industry was forecasting that it would break records, with production topping two million a year.

The Society of Motor Manufacturers and Traders, the industry body that collates the figures, has already cut its forecasts for 2021 from 1.05 million to about 950,000. That is not far above the 920,000 produced in the pandemic-hit year of 2020. It compares with the 1.3 million produced in 2019 and the near-1.7 million of 2016. The society said that the alarming decline must prompt the government to step in.

Foreign-owned brands dominate the sector in Britain. Jaguar Land Rover, based in the West Midlands and on Merseyside, is owned by Tata Motors, of India; Nissan, of Japan, produces cars in Sunderland; and BMW, the German carmaker, makes Minis in Oxford and Rolls-Royces in West Sussex. In recent years, these three have accounted for about three quarters of all UK production.

Other big producers have pulled out. Honda closed its plant in Swindon and will make its future electrified vehicles in Japan. Vauxhall, now owned by Stellantis, the Franco-Italian-American combine, is to stop making cars at its factory at Ellesmere Port in Cheshire, opting instead to produce low volumes of electric vans there. Jaguar is closing its assembly line at Castle Bromwich in Birmingham and is switching production to Solihull as it moves to becoming an electric-only brand by 2025.

“These figures lay bare the extremely tough conditions UK car manufacturers continue to face,” Mike Hawes, chief executive of the SMMT, said. “While the impact of the pingdemic will lessen as self-isolation rules change, the worldwide shortage of semiconductors shows little sign of abating.”

There is a global shortfall of computer chips for cars as production shifted during the pandemic to satisfy demand for consumer electronics. The average new car needs 1,500 microchips.

Toyota, the world’s second largest carmaker, is shutting production at some of its plants until the end of September. Meanwhile, supply shortages in Germany, the biggest maker of cars in Europe, was partly responsible for an unexpectedly large drop in the country’s key Ifo business climate index of economic activity, from 100.7 last month to 99.4 this month.

SMMT figures claim that the British automotive industry accounts for 13 per cent of the country’s exports of good.

“Government can help by continuing the Covid measures in place and boosting our competitiveness, with a reduction in energy levies and business rates for a sector strategically important in delivering net zero,” Hawes said.

The society did flag some good news: “More than a quarter of all cars made in July were hybrid or all-electric, meaning the UK turned out 126,757 of these important products this year.”

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