Yahoo Finance The 15% plunge in UK car production is a 'wake-up call' amid Brexit and US trade wars
The bad news keeps rolling in for the British car industry.
The sector saw another massive drop in auto production levels in February, with 15.3% fewer cars produced last month compared to the same period in 2018, according to a new report from the Society of Motor Manufacturers and Traders (SMMT).
This marks the ninth consecutive month of production declines and the worst February for the industry since 2011.
Car production in the past 12-month period has fallen to the lowest level since 2013, after peaking about two years ago.
The industry is “challenged by international trade hostilities, declining markets, and technological disruption,” SMMT chief executive Mike Hawes said.
The report should provide “a wake-up call for anyone who thinks this industry … could survive a ‘no-deal’ Brexit without serious damage,” Hawes said.
The entire European industry has been struggling with changes to emissions rules, falling sales, and the threat of new tariffs. Automakers are also working to scale up investments in electric and autonomous driving technologies, which has put a squeeze on other parts of the business.
Looking ahead, experts have warned that a no-deal Brexit would lead to billions of pounds in new tariff costs for UK auto manufacturers, as well as a sharp drop in manufacturing activity. The risk of new 25% tariffs on European car shipments to the US are also darkening the outlook.
READ MORE: Next disaster for Europe’s car industry? Trump’s 25% tariff threat
The UK exports about eight out of 10 cars produced in the country. Last month, demand from China shrunk by more than 50% as Chinese customers opted to delay or cancel their car purchases. British production of vehicles destined for the European Union — the biggest market for UK cars — dropped by nearly 15%.
“This underlines the importance of securing a truly free and frictionless future trading relationship with our most important trading partner,” the SMMT said in a written statement.
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The British car industry directly employs about 186,000 people in the UK, with a total of 856,000 jobs dependent on the sector, according to recent SMMT data.
In the past few months, manufacturers including British giant Jaguar Land Rover, along with Honda (HMC), Ford (F), and Michelin (ML.PA), announced cuts that could lead to roughly 14,000 UK jobs being lost.
“There’s a sense that the industry is at a tipping point, squeezed by diesel’s demise, falling sales in China, and Brexit uncertainty hampering growth — plus the need to invest in new technology,” Aston University professor David Bailey told Yahoo Finance UK in an interview last month.
READ MORE: UK car industry could face over £3bn in tariff costs with a no-deal Brexit
