UK car production at lowest level since 1964

SMMT calls for urgency in Brexit talks to secure an ambitious EU FTA quickly

UK car production at lowest level since 1964

UK car production declined 48.2 per cent in June with 56,594 units made, according to figures released this week by the Society of Motor Manufacturers and Traders (SMMT).

Although post-shutdown production slowly ramped up in the month, strict social distancing measures and weak demand across global markets continued to restrict output.

June manufacturing for the domestic market was down by 63.8 per cent, reflecting the gradual easing of the UK’s retail lockdown.

Production for export also fell, by a substantial 45.0 per cent, although overseas orders accounted for nine out of ten vehicles built as key global markets, including in the EU, China, US, South Korea and Japan, opened for business earlier than the UK.

While June marked a vast improvement on April and May, when only a combined 5,511 cars were built, the performance rounded off the worst first six months for UK car production since 1954.

Just 381,357 cars have been built since January, a decline of 42.8 per cent and representing a loss of 285,164 units.

As a consequence of the crisis, the SMMT says at least 11,349 job cuts have already been announced across the industry, including manufacturing, supply chain and retail.

New analysis suggests car production losses could total 1.46 million units by 2025 – worth just over £40 billion – if no FTA is in place by the end of 2020, forcing the sector to trade on WTO terms with full tariffs applied.

Related: Demand for new cars down 35 per cent in June

Significant questions remain about the nature of trading conditions from 1 January, with uncertainty about customs procedures, regulation and damaging tariffs causing real concern.

According to the latest survey of SMMT members, this lack of clarity is now severely hampering nine in ten companies’ ability to prepare for the end of the transition period.

The coronavirus crisis has exacerbated this, with six in ten automotive companies saying COVID-19 has diverted resources away from Brexit preparations, while more than seven out of ten view securing a tariff and quota free FTA as crucial to their future success.

Mike Hawes, SMMT chief executive, said: “These figures are yet more grim reading for the industry and its workforce, and reveal the difficulties all automotive businesses face as they try to restart while tackling sectoral challenges like no other.

Related: One in six automotive jobs at risk, warns SMMT

“Recovery is difficult for all companies, but automotive is unique in facing immense technological shifts, business uncertainty and a fundamental change to trading conditions while dealing with coronavirus.

“Its long-term future now depends on securing a good deal and a long-term strategy that supports an industry on which so many thousands of jobs across the country depend.”

The latest independent production outlook commissioned by SMMT, and also released today, now expects just over 880,000 cars to be produced in the UK this year – some 32 per cent lower than made in 2019 and 30 per cent less than anticipated in January pre-crisis.

If realised, this would be the lowest total since 1957.

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