30 May, 2019

UK car manufacturing collapses as unnecessary Brexit shutdowns take place

Car manufacturing in the UK plummeted in April as unnecessary shutdowns, due to the extended Brexit deadline, bit hard.

Just 70,971 models rolled off production lines last month, down 44.5% year-on-year, according to new figures from the Society of Motor Manufacturers and Traders (SMMT), as some carmakers initialised early shutdowns of their facilities to prevent potential Brexit-related bottlenecks. The country was due to leave the EU on 29 March; however, political issues forced an extension of this date to 31 October.

Manufacturing for domestic and overseas markets fell 43.7% and 44.7% respectively as most volume manufacturers brought forward, and extended, production stoppages normally scheduled for the summer holiday period.

BMWHonda and Jaguar Land Rover (JLR) all closed their factories in April, which, in line with the original Brexit deadline, would have allowed them time to iron out any issues surrounding parts supply and therefore prevent bottlenecks.

No going back

Shutdowns are usually organised months in advance and carmakers are unable to reorganise them at short notice due to workforce holidays and contractors, who are brought in to do maintenance while production is halted. It is highly unlikely, therefore, that the carmakers can repeat the procedure for the new 31 October exit date.

The shift in the shutdown was part of a raft of costly and ongoing contingency measures, including stockpiling, rationalisation, training for new customs procedures and rerouting of logistics, all designed to try to protect business when the UK leaves the customs union and single market.

April’s dismal performance, the 11th consecutive month of decline, exacerbated the underlying downward trend, due largely to slowing demand in key international markets, including the EU, China and the US, as well as at home.

In the year to date, 127,240 fewer cars have been built compared with the same period in 2018, a decline of more than a fifth (22.4%), with similarly large percentage falls in production for both the UK and export markets.

Brexit requirements

Provided the UK leaves the EU with a favourable deal and a substantial transition period, notwithstanding any escalation of global trade tensions, the decline in volumes is expected to ease by the end of the year as new models come on stream and production lines remain active over the usual summer shutdown months.

However, the latest independent outlook, commissioned by the SMMT, suggests output will still be down some 10.5% on 2018 levels. A ‘no deal’ Brexit, however, could increase this decline, with the threat of border delays, production stoppages and additional costs compromising competitiveness.

‘Today’s figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers,’ comments SMMT chief executive Mike Hawes. ‘Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation.

‘This is why ‘no deal’ must be taken off the table immediately and permanently, so the industry can get back to the business of delivering for the economy and keeping the UK at the forefront of the global technology race.’