UK passenger car production in 2021 fell 6.7% to 859,575 units, mostly due to COVID-19 pandemic-related issues, the Society of Motor Manufacturers and Traders said Jan. 27, adding it expected a rebound in 2022.
It was the lowest total since 1956 and 34% below pre-pandemic levels seen in 2019, said the SMMT, which expected output in 2022 to rise above 1 million units, and then to 1.1 million in 2025, due to the expected end of the global chip shortage, new models and the avoidance of additional trade barriers.
“2021 was another incredibly difficult year for UK car manufacturing, one of the worst since the Second World War which lays bare the exposure of the sector to structural and, especially, COVID-related impacts,” SMMT CEO Mike Hawes said in a statement.
The ongoing shortage of semiconductors was cited by the SMMT as a key cause of the decline, with many automakers forced to reduce or pause production while awaiting chips, whose supply was severely constrained by the pandemic.
Automakers also experienced staff shortages due to COVID self-isolation and lower demand as showrooms were forced to closed for parts of the year due to lockdowns, the SMMT said.
However, output of hybrid electric vehicles in 2021 jumped 30% to 224,011 units, which accounted for 26.1% of overall production, with production of battery-only EVs up 72%, the data showed.
Exports down 5.8%
Production for the domestic market fell 11% in 2021 to 153,749 units, while output for export markets dropped 5.8% to 705,826 vehicles.
Of the exports, 388,249 units, or 55%, went to the EU, up from a 53.5% share in 2020 although the overall total dropped 3% year on year.
While the Brexit deal allowed automotive trade with Europe to be tariff-free, the SMMT said frictions and costs had arisen from the new trading arrangements.
“While automotive businesses were as well prepared as they could be, an SMMT member survey in April revealed some nine-in-ten (91%) firms were spending more time and resource managing UK/EU trade than in 2020,” the SMMT said.
The data showed exports to the US fell 10.5% year on year and 36% to Japan, although shipments to China rose 0.6% to 57,356 units.
Exports to Canada fell 5.3% and to Australia by 31, with South Korea down 30%, the data showed.
Optimism for the future
Despite the dismal overall performance, the SMMT said there had been some developments that could give the industry increased confidence, such as the signing of the EU-UK Trade and Cooperation Agreement and publicly announced investments of up to GBP4.9 billion ($6.6 billion) in 2021, the highest total since 2013, into Ellesmere Port, Halewood, Norfolk, Sunderland and Surrey.
Of the total investment around GBP2.5 billion was in support of EVs.
Dawes was also optimistic going forward.
“With Brexit uncertainty largely overcome with the TCA deal, investments have been unleashed, most of which will help transform the sector to its zero-emission future,” Dawes said.
“This is a vote of global confidence in the UK but must be matched by a commitment to our long-term competitiveness; support for the supply chain in overcoming parts shortages, help with skills and training and, most urgently, measures to mitigate the escalating energy costs which are threatening viability.”
— Jacqueline Holman