UK demand for cars built in the country declined by a massive 47.2% in June — the result of “a perfect storm”, according to the UK’s automotive industry body.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said the fall was not only due to uncertainty on diesel cars and the “cataclysmic fall in consumer confidence” but was also due to the effects of new WLTP emissions tests coming into force on 1 September. Car makers are struggling to complete tests on all models ahead of that deadline, resulting in delays.
Hawes added that other key reasons include model changes from certain manufacturers and model allocation per country changing globally at some brands.
While this initially appears a dismal situation, the bigger picture is more optimistic. Overall UK production figures for June, including both domestic and foreign demand, fell just 5.5% compared with June 2017, with 128,799 cars built. Cars made for export balanced out the weak UK demand, rising 6% year on year.
Half-year production figures down 3.3%
In the first half of the year, the number of cars built in the UK dropped by 3.3%, amounting to 834,402 units. In that period, UK demand dropped 12.9% and car exports fell by just 0.8%.
Hawes said the SMMT’s earlier prediction that 1.6 million cars would be built in the UK in 2018 remained likely, representing a 0.2% drop on 2017.
He admitted that he was “surprised at the severity” of the almost 50% drop in UK demand in June but said he spoke to a number of car makers, all of whom described it as the “perfect storm”. He was keen to stress that we “must not look at the month in isolation”.
Hawes added that he expected the drop in UK demand to stabilise at a lower level of decline by autumn. More generally, the half-year manufacturing figures were “broadly in line with expectations”.
Individual car makers do not release their individual UK manufacturing figures. However, Britain’s largest car manufacturer, Jaguar Land Rover is believed to have produced around quarter of a million cars in the UK in the first six months of 2018, slightly down on last year. Jaguar Land Rover is not thought to have had many issues with WLTP testing, so its decline is more likely to be affected by falling diesel sales – something the car maker has previously flagged as problematic – and changing model cycles. The updated Range Rover and Range Rover Sport only started production in spring and a new Evoque is expected later this year, which is likely to mean people are holding off buying one.