Car output in Britain in January was almost flat on last year, as exports growth offset a decline in domestic demand during the month.
Output in the month fell by a negligible 0.05% year on year, as 147,481 cars rolled off production lines – effectively maintaining the nine year high set in January 2017.
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The SMMT data showed that exports drove overall volumes, with output for overseas customers rising by 1.5% to a record 119,252 units. This, the SMMT said, was in line with continued recovery across EU markets and followed the launch of several key global models throughout 2017.
The growth of exports offset a decline in production for the UK market, which fell for the sixth consecutive month, by 6% to 28,229. The SMMT put the fall in domestic demand down to falling UK business and consumer confidence and ‘confusion’ over government policies on diesel taxation and air quality plans.
Mike Hawes, SMMT Chief Executive, once again drew attention to the importance of major export markets to the UK’s automotive sector. “While it is good to see global appetite for British-built cars reach record levels in January, this only reinforces the industry’s increasing reliance on overseas demand,” he said.
“Future growth will therefore depend on maintaining our current open trade links not just with Europe but with key international markets.
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By GlobalData“A transitional deal will be an important first step but, in the long term, a seamless relationship between the UK and Europe must be maintained. The EU remains the third largest new car market in the world and, given it is on our doorstep, it is not surprising it accounts for more than half of our global exports.”
Stuart Apperley, Director and Head of UK Automotive at Lloyds Bank Commercial Banking, also noted that the UK car industry faces a number of headwinds. “Domestic consumers – while not an enormous part of the demand for Britsh-built cars – are tightening their belts after a year of rising prices and sluggish wage growth, while confusion over diesel cars is also weighing heavily on sales globally,” Apperly said.
“Meanwhile, continued uncertainty over what a post-Brexit industry might look like is hampering investment and, in some cases, causing some manufacturers to re-evaluate the number of jobs needed here in the UK.”
“Economic stability across Europe has helped sales on the continent continue to climb.”
However, he also noted there are encouraging signs. “Economic stability across Europe has helped sales on the continent continue to climb, while inflation at home may also be starting to plateau, which could in turn release the pressure on consumer spending here in the UK.
“Any of those elements may turn out to provide car makers in the UK with some welcome good news – but nothing would be as positive as greater clarity of what the industry will look like post-Brexit.”
