Car manufacturers in the UK are unlikely to hit the record-breaking goal of making two million cars a year by 2020 that was previously predicted, as a result of softening demand for new cars in the UK and a slowing of investment in UK car manufacturing facilities in the wake of uncertainty around Britain’s future role in the European Union (EU).
As a result, the Society of Motor Manufacturers & Traders (SMMT) has renewed its calls for an interim trade deal in line with the one in place today, to be agreed while Brexit negotiations are carried out, in order to provide stability for ongoing investment and to provide certainty to the UK supply chain.
SMMT CEO Mike Hawes said: “World-class engineering, productivity, strong government collaboration and massive investment in the past few years have helped UK automotive become a global success story. At the heart of this has been the free and frictionless trade we've enjoyed with the EU – by far our biggest customer and supplier.
“But Brexit uncertainty is not helping investment and growth is stalling. The Government has been in ‘listening’ mode, but now it must put on the table the concrete plans that will assure the future competitiveness of the sector. Investors need certainty, so at the very least the UK must seek an interim deal that maintains single market and customs union membership until we have in place the complex new agreement sought with the EU."
The current record for cars produced in a single year is 1.92 million, set in 1972. In 2016, a total of 1,722,698 cars were made in the UK. A report previously commissioned by the SMMT had predicted the two million mark would be breached in 2020, so long as economic and market conditions remained stable. New estimates lower that figure to between 1.8 and 1.9m.
Hawes highlighted the slowing pace of investment in UK car plants, saying that an average of £2.5 billion a year was being invested pre-2016, falling to £1.66bn last year and standing at just £322m so far this year. However, he conceded that some of this is cyclical, and a result of the heavy investment in previous years.
Car production in the UK fell by 13.7% year-on-year in June, with 136,901 cars rolling off production lines. That was the third consecutive month of decline, adding up to a 2.9% year-to-date dip in output year-on-year to June. The performance is, however, still the second highest for 12 years.
In 2017, overseas demand for British-built cars has fallen by just 0.9%, with 683,826 cars exported. The proportion of UK-built cars exported now stands at 78.9% – the highest level for five years. However, demand for domestically built cars in the UK fell by 9.5% year-on-year to 182,830 units.
Hawes confirmed that the second half of 2017 was looking more positive. “There are several new models about to be launched which should bolster demand,” he said. “Several of these are new premium cars, and the UK continues to be the world’s biggest producer of premium cars after Germany.”