The Swindon-built Honda Civic hatchback is being exported to a large number of countries, including the US

The Swindon-built Honda Civic hatchback is being exported to a large number of countries, including the US

UK car manufacturing output was up 1.3% in May, with 137,225 units produced, according to data released by the SMMT. However, output in the first five months of the year remains down by 2.9% on last year's pace.

The SMMT noted that the May gain followed a marked decline in the same month last year when several plants adjusted production schedules to prepare for a raft of new and updated models.

Manufacturing for domestic buyers grew by 12.8%, reversing a decline of equal proportion in the same month in 2017, when the market was also still feeling the effects of VED reform. Meanwhile, production for export dipped by -1.5%, with 107,307 cars destined for overseas markets and making up 78.2% of UK automotive production. In the year-to-date, output stands at 705,603 units, down -2.9% year-on-year.

Mike Hawes, SMMT Chief Executive, said: "Following the significant decline in output in May last year as several manufacturers geared up to deliver new models, growth this month was to be expected.

"For this to continue, we need to ensure UK car plants are able to attract future investment, and this will depend upon maintaining the competitive conditions that have helped drive the industry's success in recent years. Given our dependency on the EU as our biggest customer and supplier, that means retaining the benefits of the single market and membership of the customs union – the minimum requirement for frictionless trade."

Stuart Apperley, Director and Head of UK Automotive at Lloyds Bank Commercial Banking, also noted that May's numbers are difficult to compare with last year's, but said there were some positives.  "There were definitely some positives this May, with rising consumer confidence both at home and abroad, the return to growth following the weather disruption at the start of the year and continued growth in both China and the US all helping boost demand in the short term.

"The fact that this has happened without any greater certainty on the way governments intend to treat diesel in future, or on the UK's future trading relationships, is also good as it suggests that the sector is beginning to get used to navigating through fog.

"But softening growth across Europe has weighed heavy on the UK's car exports in the past month."

Apperley also appealed for more certainty on trading arrangements with the EU. "Manufacturers are having to continue making investment decisions, and what they really need for that is certainty. Without it, they will have to make contingency plans that perhaps don't include the UK.

"Only time will tell whether this period of relative stability is the start of carmakers' growing ability to maintain stability amid stiff headwinds, or merely the calm before the storm."

Earlier this week, Hawes told an SMMT conference that the UK government should rethink its position on leaving the EU customs union because the industry relies so heavily on pan-European supply chains that utilise the frictionless movement of goods across borders under current arrangements.

UK car production, May 2018

May 17May 18% ChangeYTD-17YTD-18% Change
Total135,473137,2251.3726,937705,603 -2.9
% export80.478.2NA78.979.7NA

Source: SMMT