UK automotive production rose again last month, driven by a double-digit rise in exports, making April the third straight month in which both car manufacturing and international sales increased, according to new figures from the Society of Motor Manufacturers and Traders (SMMT).
Monthly data from the SMMT showed that exports rose by 14.7% when compared with April last year, bringing the total number of international sales to 54,820 units.
Car production increased by 9.9%, rising to 66,527 units made, 5,973 more than in April 2022.
More than eight in 10 cars went for sale overseas, making exports a key driver behind this rise.
Supply chain issues ease
JustAuto attributed part of the production boost to global supply chain pressures easing, notably around semiconductors.
The EU remained the largest market for the sector, followed by the US, China and Australia. Over half (58.4%) of exports were to the EU, up 12.2% from the same month in 2022.
Exports to China fell by 3.6%, making it the only market of the big four that saw a reduction in international sales.
Electric success
Electric and hybrid cars saw significant growth, with combined sales up 56.2%, representing over a third of total production.
The SMMT said that 113,315 electric vehicles had been produced so far this year.
Mike Hawks, CEO of the SMMT, said:
“UK car production is starting to motor again, good news for the sector and the many thousands of jobs and livelihoods it sustains.
“These figures also show how exports, particularly to Europe, continue to be the foundation of British automotive manufacturing so we must do all we can to safeguard the competitiveness of these trading relationships.”
UK-EU
The SMMT drew attention to the “looming cliff-edge” of rules of origin requirements, contained in the UK-EU Trade and Cooperation Agreement (TCA), that are due to be applied from next year onwards.
Under the TCA’s rules of origin chapter, at least 40% of the value of any electric car should originate from the EU or UK in order to avoid a requirement to pay import duties, with this number increasing to 45% from 1 January 2024.
From 1 January 2027 onwards, this is set to increase to 55%, with an additional requirement that the battery must be originating for hybrid vehicles.
Renegotiate
Currently up to 70% of electric vehicle battery components can come from outside the UK or EU before tariffs apply, but this is also set to drop to 40% from 1 January 2024 onwards, with further changes planned.
As reported previously by the IOE&IT Daily Update, car manufacturers on both sides of the border are calling for the TCA to be renegotiated, amidst fears that it could damage trade when the new requirements kick in.
