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'Untold damage' from Brexit sparks 'extraordinary' drop in UK car production

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK

British car production almost halved in April due to “untold damage” caused by Brexit.

The Society of Motor Manufacturers and Traders (SMMT) said on Thursday that car production fell by 44.5% in April compared to the same month a year earlier. The SMMT called the drop to just over 70,000 cars “extraordinary.” It is the largest drop since 2009 when the industry was facing the fall out from the financial crisis.

Much of the slowdown was due to planned factory shutdowns provoked by Brexit. Jaguar Land Rover and BMW (BMW.DE) closed factories for maintenance to coincide with March 29 when Britain was due to leave the EU. Manufacturers feared that a possible no deal Brexit could leave fully staffed factories with no parts to build cars with, due to supply chains in Europe.

“Today’s figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers,” SMMT chief executive Mike Hawes said.

“Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation.”

The Brexit date has now been delayed to October 31 but the SMMT said factories could not shut down again in preparation for a possible no deal without suffering losses.

Hawes urged the government to rule out a no deal Brexit to ensure that car manufacturers have certainty about future business arrangements.

“‘No deal’ must be taken off the table immediately and permanently, so industry can get back to the business of delivering for the economy and keeping the UK at the forefront of the global technology race,” he said.

While Brexit uncertainty hit the car industry particularly hard in April, auto makers have been suffering for a while. April marked the 11th straight month of decline in production and the SMMT said that this downward trend was caused by falling demand in the US, EU, and China. Earlier this month Jaguar Land Rover blamed declining demand in China for its biggest ever annual loss of £3.6bn.

The UK has so far produced 22.4% fewer cars this year than it had at the same time last year. However, the SMMT said it expects the pressures on the industry to ease towards the end of the year provided the UK leaves the EU in an orderly manner with a deal. The SMMT is forecasting full year car production will be 10.5% less than 2018.

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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at@OscarWGrut.

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