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UK car production rises for first time in almost a year

·Finance Reporter, Yahoo Finance UK
·2-min read
Car production Cars being manufactured in the Aluminium Body Shop, part of Jaguar Land Rover's Advanced Manufacturing Facility in Solihull, Birmingham. Picture date: Wednesday March 15th, 2017. Photo credit should read: Matt Crossick/ EMPICS. Aluminium Body Shop 3 is Europe's largest aluminium body shop, and contains nearly 800 robots building Jaguar F-Pace and Range Rover Velar cars. It is capable of producing an aluminium car body every 76 seconds.
Car production levels across Britain grew for the first time in 11 months in May. Photo: Matt Crossick/Empics

Some 62,284 units left factory gates in May, up 13.3% compared with April, and the first monthly rise since June 2021

Production of full-electric cars jumped 108% to 4,525 units, according to the Society of Motor Manufacturers and Traders (SMMT).

But so far this year, overall output has decreased by 23%, as shortages of semiconductors hampered carmakers.

Read more: 'Total chaos' at Heathrow as airport cancels 30 flights

"May's return to growth for UK car output is hugely welcome after 10 months of decline, indicating the sector's fundamental resilience," SMMT CEO Mike Hawes said.

The overall output number was still 46.3% below the pre-pandemic month in 2019, with the sector struggling to ramp up production in the face of parts shortages, rising costs and disruption caused by Russia's invasion of Ukraine.

The SMMT blamed supply chain constraints, most notably the shortage of semiconductors, for constricting volumes, as well as the increasing economic uncertainty

"Any recovery, however, will be gradual as supply-chain deliveries remain erratic, business costs volatile and geopolitical instability still very real,” Hawes added.

Read more: UK household incomes fall for fourth consecutive quarter

Production for both overseas and domestic markets increased during the month by 8.9% and 39.5% respectively, while exports accounted for 82.1% of all new cars built with close to six in ten of them heading to the EU. Shipments to the US, meanwhile, fell by 35.4%.

The output of battery electric vehicles (BEVs) increased by 108.3%, while more than one-in-five (22.6%) of all cars built last month was alternatively fuelled, up from 19.3% last year.

David Leggett, automotive analyst at GlobalData, says headwinds for the UK’s motor industry are gathering, particularly in rising energy costs which are working their way through the economy and manufacturing supply chains.

'While manufacturers are still in the position of fulfilling order backlogs under long waiting times caused by an unprecedented shortage of critical parts this year, underlying demand prospects are deteriorating with lower economic growth and higher price inflation,' he explains.

'Real incomes for households and businesses will be increasingly squeezed later this year and that will dent new car demand – at home and in major export markets.

'In such circumstances it will be very difficult indeed for car companies to pass on higher costs to their customers.'

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