Currently reading: UK car production drops to lowest point since 1982
SMMT figures show major impact of ongoing semiconductor shortage; 83% of companies affected
2 mins read
28 October 2021

The latest manufacturing figures from the SMMT reveal that the UK's automotive industry is still being throttled by the ongoing semiconductor shortage.

Just 67,169 cars were built in UK factories last month. That's the lowest figure for September since 1982 and represents a 41.5% shortfall compared to the same period in 2020.

It was the third consecutive month of decline caused primarily by the so-called 'chips crisis', which is restricting car makers' ability to run at capacity - but the SMMT also cites the recent closure of Honda's Swindon plant, which built the popular Civic hatchback, as a factor.

According to the trade body, some 83% of UK automotive companies have been impacted by the shortage of semiconductors, citing "reduced orders, cost increases, logistical delays and disruption". An extra £2.4 billion spent on additional costs across the supply chain is "unlikely to be recovered", and 56% of affected firms don't anticipate the situation improving until the second half of 2022.

Around a tenth of companies have made redundancies or otherwise restructured their businesses as a result of the crisis, and more than 60% of SMEs (small and medium-sized enterprises) have asked for an extension to the government's furlough scheme - highlighting that the pandemic, though receding, is still wreaking havoc on the industry. 

On a more positive note, the SMMT notes that the popularity of electrified vehicles continues to grow, with pure-electric, hybrid and plug-in hybrid cars accounting for some 32.3% of all cars built in September. 

But the amount of cars built for export plummeted by 47.4%, largely because deliveries to the EU market came in at a third less than in September 2020. Demand from Turkey, Australia and the USA also dropped significantly. 

Year-to-date, however, production rates remain 3.8% above 2020 levels, with 656,776 cars having left UK factories in 2021 so far. Compared to 2019, though, the industry is tracking at a 33.5% shortfall, and is currently 44.1% behind the five-year-average. 

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HiPo 289 29 October 2021

The semi-conductor shortage is all very convenient to explain low sales isn't it?   In fact, many buyers are waiting for the right electric car to come along, according to their needs, so they are holding back on buying or leasing a new vehicle.  This isn't rocket science, because clever people know that internal combustion has a limited shelf-life, so they may as well get prepared now.  That's just sensible.  (As the famous economist said: "If something can't go on forever, it will stop." It's that simple.) 

By the way, did you know that Tesla re-mapped their software so that they could use chips that weren't in short supply?  Why can't other manufacturers do that?  Possibly because Tesla has better software?