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UK car output has been hit hard by the COVID-19 crisis and is forecast to be down by a third this year |
UK car output declined 48.2% in June with 56,594 units produced, rounding off the weakest first six month period since 1954 as the industry was severely impacted by the COVID-19 pandemic.
UK factories turned out just 381,357 cars in the year-to-date, down 42.8% on 2019 – a decline of more than 285,000 units.
The SMMT also said that 11,349 jobs have already been lost across automotive manufacturing and retail during the pandemic, with more at stake without dedicated restart support as firms fear double whammy of Brexit tariffs.
The SMMT called for urgency in talks to secure an ambitious EU FTA quickly as a new survey reveals 9 in 10 firms lack clarity to prepare for the end of the Brexit transition period at the end of the year.
Although post-shutdown production slowly ramped up in June, strict social distancing measures and weak demand across global markets continued to restrict output.
June manufacturing for the domestic market was down by 63.8%, reflecting the gradual easing of the UK’s retail lockdown. Production for export also fell, by a substantial 45.0%, although overseas orders accounted for nine out of 10 vehicles built as key global markets, including in the EU, China, US, South Korea and Japan, opened for business earlier than the UK.
While June marked a vast improvement on April and May, when only a combined 5,511 cars were built, the performance rounded off the worst first six months for UK car production since 1954.
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.
“The critical importance of an EU-UK FTA is self-evident for UK Automotive. 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. This industry has demonstrated its inherent competitiveness and global excellence over the past decade. Its long-term future now depends on securing a good deal and a long-term strategy that supports an industry on which so many thousands of jobs across the country depend.”
The latest independent production outlook commissioned by SMMT expects just over 880,000 cars to be produced in the UK this year – some 32% lower than made in 2019 and 30% less than anticipated in January pre-crisis. If realised, this would be the lowest total since 1957.
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, while a successful conclusion to negotiations with a zero tariff and quota FTA would see car volumes recovering to pre-crisis levels of 1.2 million units within the next few years and the potential for further long-term growth after that.
