Historic slump in car production in recent months, report reveals

Car production slumps
Car production slumps - (Copyright PA Wire)
10:27am, Thu 30 Jul 2020
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The number of cars built in the UK over the past six months has slumped to the lowest since 1954, when food rationing ended, new figures reveal.

A total of 381,357 cars were built in the six months to June, a decline of 42% on the same period last year, said the Society of Motor Manufacturers and Traders (SMMT).

The virus crisis led to widespread closures and job losses, and the SMMT warned more were at stake amid fears of a “double whammy” of Brexit tariffs.

The trade body estimated that 11,349 jobs were axed in the past six months at carmakers and companies which supply them with parts and services.

The SMMT called for urgency in talks to secure a trade deal, saying most car firms complained of a lack of clarity to prepare for an end of the transition period.

Our factories were once set to make two million cars in 2020 but could now produce less than half that number, a result of the devastating effects of the pandemic on top of already challenging market conditions and years of Brexit uncertainty.

Car production fell by 48% in June compared to the same month a year ago, with 56,594 units made, as social distancing measures and weak demand across global markets continued to restrict output.

June manufacturing for the UK market was down by 63%, while exports were 45% lower.

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.

“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.

“Our factories were once set to make two million cars in 2020 but could now produce less than half that number, a result of the devastating effects of the pandemic on top of already challenging market conditions and years of Brexit uncertainty.”

Mr Hawes said the long term future of the motor industry now depended on securing a good trade deal, pointing out that the EU remained the biggest market for UK cars.

The industry was facing a “plethora” of issues, including Brexit, recovery from Covid-19 and measures to make vehicles more environmentally friendly.

The SMMT had ideas on schemes to stimulate the sector and save jobs, said Mr Hawes, adding sales in September will be crucial in determining the future of the industry.

An analysis by the SMMT suggested that without a positive trade agreement with the EU, and the industry trading on World Trade Organisation terms with 10% tariffs, annual output could stay around 800,000 to 2025.

The report added that significant questions remained about the nature of trading conditions from January, with uncertainty about customs procedures, regulation and damaging tariffs causing “real concern.”

The lack of clarity was “severely hampering” the ability of most car companies to prepare for the end of the transition period, said the society.

Unite assistant general secretary Steve Turner said: “Buffeted by the twin forces of the coronavirus pandemic and the ongoing challenges Brexit poses to the sector, the future of the UK’s world-leading automotive sector and the thousands of well-paid and skilled jobs that come with it, is in doubt.

“These historic lows in production show the industry is standing at a crossroads: Either the Government leaves it to become a shadow of its former self or provides the support and investment needed for it flourish as a producer of the next generation of cleaner cars.

“UK vehicle manufacturers have a vital role to play in the country’s, and indeed the world’s, transition to low carbon, but they cannot do this until the Government lays the groundwork.”

Doug Parr, policy director at Greenpeace UK, said: “The threat of such a significant number of job losses from the automotive sector is deeply troubling, both to the workers, industry and economy. This fall in production is yet another blow to an industry already at risk of being overtaken by Germany, which is ploughing huge sums into electric car production.

“This is exactly why the UK Government needs to provide direction and support to industry, and retraining for workers, by turbocharging the electrification of vehicle production.”

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