27 February, 2020

UK manufacturing continues its decline in January

Car production in the UK fell in the first month of 2020 as the automotive sector continues to struggle in the wake of political and economic challenges.

The number of vehicles built in Britain fell by 2.1% in January, figures from the Society of Motor Manufacturers and Traders (SMMT) show. Factories turned out just 118,314 vehicles, marking the fifth successive month of decline, and the 19th time in the last 20 months that numbers have dropped.

The vast majority of this figure (82.7%) were built for overseas markets, with international orders for vehicles rising 4.1% to 97,870 units. This was boosted by the appeal of the latest models coming to market from certain brands, with rising demand for them in key European and Asian markets.

However, this growth failed to offset a decline in production for the UK, which suffered a fall of 23.9% compared to the same period last year. The SMMT believes this is due to continued weak confidence in the market, a situation that has led to the lowest January domestic production figures for nine years.

Falling fortunes

The continuing collapse of automotive manufacturing in the UK comes when the country is still oblivious to the type of trade deal it will have with the EU following the end of a transition period.

Although production figures showed a healthy rise in August 2019, this was an anomaly as many factories undergo an annual shutdown for required machine maintenance during the summer months. Last year, several carmakers brought this planned closure forward to April to coincide with the 29 March Brexit deadline, which was subsequently missed. Not all carmakers closed their plants early, however.

Therefore, August figures came up against a traditionally slow month, showing an increase in production as a result. In April and August 2018, 217,224 vehicles were produced, while the same two months last year only yielded 163,129, a drop of nearly 25%. Full-year manufacturing in the UK fell by 14.2%.

Government help

‘Exports are the bedrock for UK car manufacturing, so a rise in January exports is welcome following recent declining demand in overseas markets,’ says SMMT chief executive Mike Hawes. ‘These figures, however, still give great cause for concern, with another month of falling car production driven by a lack of confidence and corresponding weak demand in the UK.

‘The upcoming Budget is an opportunity for the Government to provide supportive measures to stimulate the market, but the biggest boost would be the agreement of an ambitious free trade deal with Europe. This would end the ongoing uncertainty and help the UK to recover its hard-won reputation as a great place for automotive investment.’