According to the Society of Motor Manufacturers and Traders (SMMT), the number of cars produced in the UK fell 14.4 percent year on year in March. A total of 126,195 cars rolled out of UK’s production lines in March 2019, a significant drop from 147,505 in March 2018. This drop in production also signifies a trend as it represents the tenth month in a row car production in the UK has been on the decline.
The production of vehicles intended for the home market took the biggest fall at 18% with 32,808 cars made for the domestic market last year as compared to 26,873 this year. Even exports that make up 77.8 percent of all UK made cars also saw a drop in production of 13.4% with 99,322 cars made this March for export as compared to 114,697 made in the same period last year.
Production continues to fall in the UK
In general, the overall production of vehicles in the UK is down by 15.9 per cent year to date. That is more than 370, 289 cars produced this year as compared to 440,530 last year. This decline has been blamed on several factors including softening sales in the European Union and Asia as well as model changes and the shifting global car segment preferences.
Brexit, as you can well already guess, has also had an impact on the car manufacturing business. But the SMMT says that if ongoing negotiations produce a “positive result” which they describe as a” favorable deal and transition period maintaining the status quo” UK car production could be at 1.36 million cars in 2019 which is still down from 1.52 million cars made in 2018. The SMMT however expects that the number of units leaving the production line could go up to 1.42 million by 2021.
If on the other hand the UK leaves the union without a deal and conducts business as per the WTO rules, the SMMT predicts that the number of cars manufactured in the UK could fall by around 30 per cent. In 2021, a UK outside the EU could be producing only 1.07 million cars per year. Therefore, the SMMT chief executive, Mike Hawes has called upon the government to find a favorable compromise on Brexit to reduce the effects the negotiations are having on this and many other industry.
The direction the industry is taking is even more depressing considering that the latest 2019 figures already show a decline of 9.1 per cent and investments in the automotive industry have also fallen by 46.5 per cent. In 2018, 1.52 million cars were built in the UK, a 9.1 percent decline from the 1.6 million vehicles built the previous year.
This trend is easily seen when you take the different manufacturers into account. Vauxhall saw a 15.9 per cent drop in the number of cars made, Nissan a 10.7 drop and Toyota was down 10.4 per cent. Even Jaguar and Land Rover saw a 15.6 per cent reduction in production. It is only MINI plants that saw an increase of about 7% in production.
While this downfall can largely be blamed on the uncertainty created by Brexit, the diesel downturn, a stagnant UK market, a slowdown in China and model cycles, the greatest concern in this market that employs more than 865,000 people across the UK is the declining investment seen last year. According to the SMMT, the total investment in the automotive industry last year was £588.6 million down from the previous year’s total investment that stood at £1.1 billion. The year before, the investment stood at £1.3 billion.
But still the SMMT maintains that the biggest boost to the automotive industry would be a Brexit deal. Uncertainty is the enemy of any business and the uncertainty the nation is facing as a result of Brexit has already done tremendous damage to the output, jobs and investments. The SMMT also acknowledges that the decline in investments in the automotive industry could also be about sentiment. SMMT chief executive, Hawes says, “You can be competitive and have all the right positions… but do you feel confident about investing in the UK in the long term?”
Like every other business in the UK, the automotive industry is fearful of a no-deal Brexit. That’s because the EU is by far the largest buyer of UK made cars and the UK will still need to do business with the EU, only now it will be rules set by Europe.