UK markets closed

Biggest drop in UK car production since 2011 as firms face perfect storm

Tom Belger
Finance and policy reporter
SMMT figures suggest total UK car production is significantly lower than a year ago. Photo: PA

UK carmakers have seen the steepest drop in production this year so far since 2011, according to new figures.

The number of cars rolling off factory lines across the UK plummeted by 17% in the year to August compared with a year earlier, the largest fall in eight years.

Just under 867,000 cars have been manufactured in 2019, according to leading industry body the Society of Motor Manufacturers and Traders (SMMT).

It is also the first time in five years the number of cars produced has dropped below 1 million.

The latest figures showed a “welcome” 3.3% year-on-year rise in August, but the SMMT put it down to the one-off effects of production rolling on instead of the usual autumn shutdown.

Many firms’ brought forward their shutdowns to April when they expected Britain to crash out of the EU without a deal in March.

READ MORE: Car industry chiefs across Europe unite in sounding the alarm over a no-deal Brexit

Mike Hawes, SMMT chief executive, said: “While growth is always welcome, today’s figures mask the underlying downward trend and strengthening global headwinds facing the sector.”

He singled out international trade tensions, technological upheaval and political and economic uncertainty as Britain draws closer to Brexit.

Hawes added: “Softening of global demand is compounding the challenge to UK manufacturers for whom a ‘no-deal’ Brexit would be a hammer blow.

“The mere threat of no-deal has undermined investment and the potential imposition of tariffs, border delays and additional administrative burdens would damage competitiveness.

“We now need parliament and government to redouble efforts to get a deal that maintains free and frictionless trade. Given the ongoing challenges and costs being incurred, there is not a moment to lose.”

SMMT chief executive Mike Hawes. Photo: Frank Augstein/AP

READ MORE: Daimler fined £766m over ‘dieselgate’ scandal

The heads of car industry bodies in 23 different countries came together in a remarkable show of unity this week to sound the alarm over a no-deal Brexit.

“The UK’s departure from the EU without a deal would trigger a seismic shift in trading conditions, with billions of euros of tariffs threatening to impact consumer choice and affordability on both sides of the Channel,” they said in a statement.

Car industry figures have repeatedly warned their highly integrated just-in-time supply chains across Europe could be devastated by new delays, barriers and bureaucracy between the UK and the EU.

The latest data shows domestic production rose significantly in August but growth in the dominant export market was “marginal” at 0.6%, with exports to China nosediving by 43.8% as demand has cooled and global trade tensions bite.

Nissan (NSANY) also said last month its UK production had plummeted by almost a third between April and July compared with a year earlier.