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UK car production falls 20% while cost of Brexit mitigation rises

UK car manufacturing fell by a fifth (20%) in the first half of 2019, with the latest decline in June marking 13 consecutive months of negative growth.

The SMMT says JLR’s announcement earlier this month that its electric XJ will be produced in the UK is “something of an outlier”

The figures from the Society of Motor Manufacturers and Traders (SMMT) show 1,666,521 cars rolled off production lines in the first six months, down 168,052 units year on year due largely to falling demand in key markets, including the UK, exacerbated by factory shutdowns pulled forward in anticipation of the March Brexit deadline.

Downturns were recorded in both the domestic and global markets, declining 16.4% and 21.0% respectively, with April’s extraordinary Brexit shutdowns adding to the losses.

The news comes as new SMMT research, also released today, reveals that at least £330m has already been spent by the car manufacturing sector on contingency plans, including stockpiling materials and components. Significantly, many manufacturers have already moved annual plant shutdowns from the summer to April – the initial EU departure date – which means they won’t be able to repeat this for the October deadline now proposed.

SMMT figures also show newly pledged investment in the sector fell more than 70% in the first half to £90m, contrasting with the average annual investment figure of £2.7bn over the previous seven years. The association added that the Jaguar Land Rover announcement earlier this month committing production of its forthcoming electric XJ to its Castle Bromwich plant is “something of an outlier as the vast majority of manufacturers have suspended plant and product spending in the UK amid ongoing uncertainty”.

Mike Hawes, SMMT chief executive, said: “Today’s figures are the result of global instability compounded by ongoing fear of ‘no deal’. This fear is causing investment to stall, as hundreds of millions of pounds are diverted to Brexit cliff-edge mitigation – money that would be better spent tackling technological and environmental challenges.”

He added: “The industry’s foundations are fundamentally strong, however, and we’re ready to work with the new government to build on these through the industrial strategy. We need an internationally competitive business environment to encourage more investment, more innovation and more growth. That starts with an ambitious Brexit deal that maintains frictionless trade and we look to the new administration to get a deal done quickly so manufacturers can get back to the business of building cars and helping deliver a brighter future for Britain.”

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Natalie Middleton

Natalie has worked as a fleet journalist for 16 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006. Prior to this, she worked on a range of B2B titles, including Insurance Age and Insurance Day. As Business Editor, Natalie ensures the group websites and newsletters are updated with the latest news.