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October UK car production falls 18.2% as sector awaits critical Brexit deal

Published: 26 November 2020 - Victoria White

UK car manufacturing output fell 18.2% in October, with 110,179 units leaving factory gates, according to the latest figures issued today by the Society of Motor Manufacturers and Traders (SMMT). This represented 24,490 fewer cars made than in the same month in 2019 with the impact of coronavirus and fresh lockdowns at home and overseas subduing demand in many key markets.

October’s decline was driven largely by falling exports, particularly to the EU and US, down 19.1% overall and equivalent to a loss of 21,569 vehicles. Shipments to the US fell by 26.0% and to the EU by 25.7%. Major Asian markets fared better, with exports to Japan and China up 57.1% and 9.7% respectively, reflecting less stringent lockdown measures, but this was not enough to offset losses elsewhere. Production for the domestic market also fell, by 13.6% to 18,629 units, with 2,921 fewer cars made for buyers in the UK than a year earlier.

October’s performance rounds off an extremely tough 10 months for UK car makers and suppliers, and production is now down 33.8% since January to 743,003 units – a year on year shortfall of 379,308 units worth some £10.4 billion.

Mike Hawes, SMMT Chief Executive, said, “These figures are yet more bad news for an industry battered by Covid, Brexit and, now, the unprecedented challenge of a complete shift to electrified vehicles in under a decade. While the sector has demonstrated its resilience, we need the right conditions to remain competitive both as a manufacturing nation and a progressive market. Yesterday’s Spending Review recognised the need to invest in a green industrial revolution, but this must be at globally competitive levels and equal to the scale of ambition to keep this sector match fit. Above all, we must have a Brexit deal, one with zero tariffs, zero quotas and rules of origin that benefit existing products and the next generation of zero emission cars, as well as a phase in period that allows this transition to be ‘made in Britain’.”

The news comes as the sector eagerly awaits agreement of a UK-EU trade deal and with new figures revealing the incredible cost of trading with WTO tariffs long-term. In the event of ‘no deal’, production losses could cost as much as £55.4 billion over the next five years, and even with a so-called ‘bare-bones’ trade deal agreed, the cost to industry would be some £14.1 billion. For the automotive sector, Brexit has always been about damage limitation and, with a mere 35 days left until the end of transition, the sooner new trading terms are agreed and finer details communicated the better.

Source: UK Manufacturing

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