UK car production fell by 48.2% year on year in June, with half-year output running at its lowest level since 1954 despite a partial recovery from April-May lows, according to figures released July 30 by the Society of Motor Manufacturers and Traders.
“Although post-shutdown production slowly ramped up in the month, strict social distancing measures and weak demand across global markets continued to restrict output,” SMMT said in a statement.
A total of 56,594 units were produced in June, “rounding off [the] weakest six months since 1954,” SMMT said, adding that for the first six months of the year production of 381,357 units was down 42.8% on H1 2019 — a decline of more than 285,000 units.
June manufacturing for the domestic market was down by 63.8% year on year, reflecting the gradual easing of the UK’s retail lockdown, while production for export also fell, by a substantial 45%, the group said.
SMMT added, however, that overseas orders accounted for nine out of 10 vehicles built as key global markets, including the EU, China, US, South Korea and Japan, opened for business earlier than the UK.
“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,” said Mike Hawes, SMMT’s chief executive, citing ongoing concerns over a possible “no-deal” Brexit.
According to a survey of SMMT members, six out of 10 automotive companies say COVID-19 has diverted resources away from Brexit preparations, while more than seven out of 10 view securing a tariff- and quota-free trade agreement between the UK and the EU as crucial to their future success.
The latest independent production outlook commissioned by SMMT now expects just over 880,000 cars to be produced in the UK this year — around 32% lower than 2019 and 30% less than anticipated in January pre-crisis, the group said.
“The analysis also suggests that without a positive trade agreement with the EU, and the industry trading on WTO terms with 10% tariffs, output could stay around the 800,000 mark, or less, to 2025,” SMMT said.
In contrast, a successful conclusion to negotiations with a zero tariff and quota free trade agreement would see car volumes recovering to pre-crisis levels of 1.2 million units within the next few years, with potential for growth thereafter, it added.
“The critical importance of an EU-UK FTA is self-evident for UK automotive. Our factories were once set to make 2 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,” said Hawes.
— Andy Blamey