UK car production increased for the third consecutive month in July but is still significantly below pre-pandemic levels, having been hampered by a decline in exports and supply chain problems.
Latest figures from the Society of Motor Manufacturers and Traders (SMMT) show production output increased by 8.6% last month, as the sector starts to recover from shortages of key components – notably semiconductors.
Declines
A total of 58,043 units were produced in July, but despite three months of growth, year-to-date production remained 16.5% below the same period in 2021.
Over the year so far, 461,174 units have been produced, representing a shortfall of 91,187.
The SMMT attributed the decline to supply chain shortages, structural changes and weak exports, which fell -21.3% to 363,223 units.
The crisis in Ukraine – a major hub for automotive parts – and lockdowns in China have contributed to the shortages of parts that have impacted the sector, reports Reuters.
Parts shortages easing
Mike Hawes, SMMT chief executive, welcomed the third consecutive month of growth, saying it provided “some hope that the supply chain issues blighting the sector may finally be starting to ease”.
He added: “But other challenges remain, not least energy costs which are increasing at alarming rates. If we are to attract much needed investment to drive the production of zero emission vehicles, urgent action is needed to mitigate these costs to make the UK more competitive for manufacturing.
“This must be a priority for the next prime minister, else we will fall further behind our global rivals, risking jobs and economic growth.”
Government action
Richard Peberdy, KPMG’s UK head of automotive, echoed Hawes’ call for the next PM to play a fundamental role if Britain’s car industry is to remain competitive.
He told City AM: “UK car manufacturers will be looking to the new prime minister and government to support the competitiveness of the industry over the coming months, particularly as it looks to seize electric vehicle market share globally.”
Nearly 30% of vehicles produced in the UK are now electric or hybrid models.
Export shift
Exports of British-made cars account for about 80% of production, reports the Times.
Post-Brexit rule changes have contributed to a 7.3% decline in EU sales fall by 7.3%, although this has been offset by a 54% rise in exports to China, as well as a 40.1% rise in orders to Japan.
Rising costs
Whilst supply chains are beginning to ease, What Car? editor Steve Huntingford, told Car Dealer that rising energy costs will start to impact both the auto-sector and consumers.
“Automotive manufacturing is an energy consumptive industry, and the SMMT has previously estimated the rise in energy prices will add another £90m in costs for OEMs operating in the UK this year alone,” he said.
