Car production in the UK hits a five-year low as industry says it’s on ‘red alert’ from Brexit

UK car production fell 9.1% year on year in 2018, while automotive investment almost halved, according to the Society of Motor Manufacturers and Traders.

UK car plants produced 1.52 million cars in 2018, the lowest figure in five years. Cars made and sold in the UK fell 16.3% while exports dropped 7.3%. Eight in ten cars made in the UK are exported.

The decline is being blamed on regulatory changes and diesel policy uncertainty, plus slumps in demand in both China and Europe. Declining consumer and business confidence as a result of Brexit is another major factor that was cited.

“The bottom line is that it’s a deeply depressing figure," said SMMT chief executive Mike Hawes. "Product cycles always have an effect. WLTP [emissions changes] affected production. Diesel uncertainty - not just in the UK but also in Europe, but particularly Germany and France - was a factor.

Opinion: Will Brexit kill the British car industry?

“Furthermore, there is falling business and consumer confidence here and elsewhere, and UK manufacturers are exposed to the global market.”

Meanwhile, investment in the UK automotive industry plummeted by 46.5% to £588.6 million. It is the first time since 2012 that investment has been less than £1 billion. Firms announcing investments in 2018 included Aston Martin and car seating and electrical company Lear.

Hawes said: “The most alarming figure [here] is around automotive investment. It has effectively stalled. The manufacturers need to make underlying investments but a lot of that is on hold until we see what the future is. They are saying: ‘Do we have the confidence to invest in that plant when there is this [Brexit] uncertainty?’”

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Jaguar Land Rover and Nissan production falls

Coventry-based Jaguar Land Rover, which announced 4500 job losses as well as factory shutdowns earlier this month, remains the biggest car maker in the UK. Its output fell 15.6% in 2018 to 449,304 units across its three factories in Castle Bromwich, Halewood and Solihull.

The hardest hit was Vauxhall, with its production falling 15.9% to 77,481. The PSA-owned firm only produces one car in the UK at its Ellesmere Port plant, the Astra.

Meanwhile, Nissan output fell 10.7%, Toyota’s dropped 10.4% and Honda’s decreased by a modest 2.1%.

Mini bucked the trend, with a 7% rise. It produced 234,183 cars at its Oxford facility in 2018.

The top British best-sellers worldwide were:

1. Nissan Qashqai

2. Mini

3. Honda Civic

4. Toyota Auris

5. Vauxhall Astra

6. Range Rover Sport

7. Nissan Juke

8. Range Rover

9. Range Rover Velar

10. Jaguar F-Pace

The number of diesel cars made in the UK fell 22% to 561,384 units, while petrol production dropped 3.5%. Alternatively fuelled vehicle production rose 41.5% to 142,732 units. The electric Nissan Leaf is built in Sunderland and the plug-in hybrid Range Rover and Range Rover Sport are also made in the UK.

UK exports around the world in 2018

Hawes described output to Europe, which has fallen 7.3%, as “pretty flat” and noted it was “still overwhelmingly the biggest market”.

UK car exports to China suffered the biggest hit in 2018, falling 24.5%.

Growing markets included the US (+5.3%), making it the UK’s second biggest customer after the EU, Japan (+26%) and South Korea (+23.5%).

According to the SMMT, two-thirds of the UK’s car exports are to Europe or markets with preferential EU trade agreements.

A spokesman said: “Time has almost run out to guarantee continuity of any of these arrangements before Brexit, and ‘no deal’ could therefore put more than two-thirds of UK automotive’s global trade under threat.”

The Brexit effect

Hawes said he hoped that the industry “has not reached the point of no return” in relation to the damage already done since the Brexit referendum.

He said the supply chain is particularly vulnerable, as it quickly feels the effect of falls in manufacturer volume.

Talking about the mood within the industry, he said: “We’re not at the financial crisis levels [of 2008]. But the lack of clarity means the mood is incredibly nervous and everybody is increasingly exasperated.”

If there is a Brexit transition, Hawes predicts production will fall by a further 20,000 units in 2019. He said it was “impossible to put a number on production under a no-deal scenario.

“Long term, no deal would be a catastrophe for the industry. It would be hard to see the levels of production volumes that we currently have. Three or four years ago, I was bullish about the state of UK car manufacturing. I’m anything but now.”

He concluded: “With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK automotive is on red alert. Brexit uncertainty has already done enormous damage to output, investment and jobs. Yet this is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely.

“Given the global headwinds, the challenges to the sector are immense. Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from no deal.”

Read more

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Comments
14

31 January 2019

Post brexit no matter what happens the UK has to establish itself as a maker of EV's. I hate EV's however they are the future. The Car manufacturing sector has fallen behind Tesla on this front and that along witht the infrastructure is mostly to blame. Thats my opinion anyway

31 January 2019
Craig1988 wrote:

Post brexit no matter what happens the UK has to establish itself as a maker of EV's. I hate EV's however they are the future. The Car manufacturing sector has fallen behind Tesla on this front and that along witht the infrastructure is mostly to blame. Thats my opinion anyway

 

Post Brexit, UK car industry will have less investment.

Where will it find the money to develop new EVs?

31 January 2019
Craig1988 wrote:

Post brexit no matter what happens the UK has to establish itself as a maker of EV's. I hate EV's however they are the future. The Car manufacturing sector has fallen behind Tesla on this front and that along witht the infrastructure is mostly to blame. Thats my opinion anyway

You hate EVs ? All of them ? Why ?

XXXX just went POP.

31 January 2019

The problem (which has ZERO to do with Brexit) is the very list of the cars given above - just look at them.  Most of that list need urgent replacement with new models - and most replacements are in the pipeline.  It's asinine to blame Brexit (which hasn't happened yet, and still may not) and simply trotted out by people like 'scrap' because they're ignorant.  As I said, simply look at the list.  Companies like VW and BMW have their share prices down on last year quite significantly.  As are Ford in the US.  Brexit?  NO!  Just grow up.

Many of the drops in sales are due to a worldwide slowdown in demand - some are due to mismanagement.  PSA is doing OK.  Companies who are giving people cas they want are doing perfectly OK.

Post-Brexit, there will be a short-term hit on the economy as it re-adjusts, then companies will have access to worldwide markets at lower-tariff prices.  Plus, Britain will be allowed once more to offer sweeteners to companies to build factories here - this is what is worrying EU manufacturing.  Under EU laws, we cannot do that.  You know, like Slovakia did to JLR!

https://www.ft.com/content/74ab02a6-fd85-11df-a049-00144feab49a

It all depends, of course, on what tariffs we negotiate.  But UNTIL THEN, you can't blame Brexit!

I say my bit, then go. So although I'm interested in what you may initially say, I don't care what you think about what I've written, so I won't read whatever your reply is.

31 January 2019
That bloke wrote:

The problem (which has ZERO to do with Brexit) is the very list of the cars given above - just look at them.  Most of that list need urgent replacement with new models - and most replacements are in the pipeline.  It's asinine to blame Brexit (which hasn't happened yet, and still may not) and simply trotted out by people like 'scrap' because they're ignorant.  As I said, simply look at the list.  Companies like VW and BMW have their share prices down on last year quite significantly.  As are Ford in the US.  Brexit?  NO!  Just grow up.

Many of the drops in sales are due to a worldwide slowdown in demand - some are due to mismanagement.  PSA is doing OK.  Companies who are giving people cas they want are doing perfectly OK.

Post-Brexit, there will be a short-term hit on the economy as it re-adjusts, then companies will have access to worldwide markets at lower-tariff prices.  Plus, Britain will be allowed once more to offer sweeteners to companies to build factories here - this is what is worrying EU manufacturing.  Under EU laws, we cannot do that.  You know, like Slovakia did to JLR!

https://www.ft.com/content/74ab02a6-fd85-11df-a049-00144feab49a

It all depends, of course, on what tariffs we negotiate.  But UNTIL THEN, you can't blame Brexit!

Mr Hawes represents a trade body...er....which is like....mmmm....a pressure group for people who make cars. Funny that. Methinks the Lady doth protest too much.  And then what do you get, Mr Hawes ? Well, people just think you're crying wolf....which, of course, you are. And then we all stop listening.

The reason, Mr Hawes, that production is down is because it's 'down' for pretty much everyone. Doh ? Yes, 'doh' indeed. The reason it's 'very down' for JLR, for example, is because , right now Mr Hawes, they don't make the right product at the right price.  Yeh, I know, Mr Hawes, it's massively difficult to get your head around that one. 

Why 'investment' is down at, say, a 'UK Champion' like JLR, Mr Hawes, is because of laughably amateur midlander management (and a German coterie that's 'gone native') and the result is as aforementioned. 

Where investment is down elsewhere might, Mr Hawes, be to do with 'foreign-controlled' companies that will screw their UK resource before their own: not looked at the long history  of PSA, Mr Hawes ? 

Lastly, though clearly not mass-market, what's the picture like, Mr Hawes, at Aston, or Morgan or Lotus...or at people who would fall around laughing at some of the antics of the SMMT (ooo, shall we say 'new' car people like Dyson ?) ?  

You've been in place at the SMMT for a long time, Mr Hawes. Time to retire ?

 

 

BertoniBertone

31 January 2019

I criticise the bloke too, but listening to him the other night on 5Live, he certainly didn't give Brexit as much weight as other factors for the downturn.

Could this be another case of media being selective in what they report? Now given Autocar is published by Haymarket who's founder and manager happens to be the Heseltine's - well known anti brexiteers...

Of course the car industry wouldn't be the only brexit loss (if you believe the hype that is), landowners would loose out on EU subsidies too. Poor old Hezza, wonder how much he stands to loose?

Thinking about it, it's a pity the car industry doesn't work like landowners because the madmen at the EU give them subsidies to produce nothing.  

31 January 2019

Read today's SMMT press release. It's all about Brexit.

31 January 2019

Indeed. Look closer at the SMMT's own figures, and it's less about Brexit than it is about falling exports for JLR and Nissan.

2018 production was down about 150,000 cars, give or take. 

JLR production was down by about 82,000, yet domestic sales were only down by about 3,500. So JLR exported nearly 80,000 fewer cars than in 2017. Why? Falling sales in China (nothing to do with Brexit) and offshoring Discovery production to its shiny new factory in Slovakia - which was commissioned a year before the EU referendum even took place.

Nissan production was down by about 50,000, give or take, with domestic sales also down by about 50,000. Half of Nissan's UK sales are Qashqai, which is now an old car in a very competitive market. Juke is at end of life and about to be replaced, so production will be low now but should be boosted when the new one arrives. Leaf is still very niche, and Infiniti Q30/QX30 production is also small.

Those two companies account for 130,000 of the 150,000 drop in production, and neither of those falls are Brexit-related.

UK buyers are also buying fewer UK-built cars, which doesn't help. SMMT's own figures say domestic sales of UK-built cars was down nearly 21% in 2018, yet overall market was only down 7%. If more British buyers bought British cars, it wouldn't matter what sort of Brexit we get.

31 January 2019
It's quite simple.

The world is losing interest in cars.

The car industry is doing a good job of encouraging that loss of interest.

And basing the future on SUVs, the least zeitgeist format imaginable, will shortly prove to be insane.

31 January 2019

I think eseaton raises a valuable point - are the new generation less interested in having a car, eg due to Uber, social costs and a lack of general technical/mechanical interest/competence.

How much is lowered production due to lack of confidence/belt tightening amongst UK customers (especially business) due to Brexit?

It looks increasingly likely that Brexit will be delayed since they haven't enough time left to get all the enabling/replacement legislation through by the end of March - if I was a car manufacturer/component supplier I would be furious with this incompetent PM/government since it's too late to cancel the April shutdowns and they may have to decide to have another set as a precaution later in the year.

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