Car production in Britain declined by 13.7% in June according to data released by the SMMT.
The UK’s automotive industry trade association also repeated its call for the British government to outline Brexit plans and ensure barrier free trade with the EU.
In the first half of the year UK car output was down by 2.9% to 866,656 units.
The SMMT said June was the third consecutive month of decline, following changes in production schedules for new model introductions.
Production for export continued to drive volumes in 2017 as first-half demand for British-built cars held steady, dipping by a marginal -0.9%, with 683,826 cars shipped overseas to some 160 countries worldwide. The percentage of cars built for export now stands at 78.9% – the highest for five years.
Meanwhile, demand from the home market declined by -9.5% to 182,830 units, as the UK new car market cools following a long period of record growth.
The SMMT said that production is forecast to rally in the second half of 2017 with a number of new models and updates planned for production later this year – many from premium brands.
However, market softness both in the UK and certain key export markets may see the 2017 forecast revised, the SMMT said.
Looking further ahead, the base outlook with an interim Brexit deal secured, has been revised and the analysis forecasts industry will just miss the ambition of 2 million cars by 2020 (1,993,750).
In the first six months, global demand grew in a number of markets, notably the US – the UK’s biggest export region after the EU – where exports rose by more than a third (37.6%) thanks to the launch of a raft of new models. Demand also grew substantially in Canada (66.7%) and Australia (8.4%), while China maintained its position as the UK’s third biggest customer, taking 7.0% of exports.
However, despite a -7.9% decline in demand, the EU remained the UK’s biggest trading partner, accounting for 373,650 units – more than half of all cars produced for export (54.6%). EU countries also make up half of UK Automotive’s top 10 export destinations, with Germany and Italy the UK’s second and third biggest markets after the US and ahead of China.
Although UK Automotive exports eight out of every 10 cars it builds to customers in some 160 countries worldwide, it is also a major importer. More than 85% of the cars registered by British buyers in the first six months of the year came from overseas plants, and more than two thirds (67%) from the EU, highlighting the importance of mutually beneficial tariff- and barrier-free trade, the SMMT noted.
Mike Hawes, Chief Executive, SMMT, said: “World class engineering and products, strong government collaboration and massive investment have helped UK Automotive become a global success story. At the heart of this has been the free and frictionless trade we’ve enjoyed with the EU – by far our biggest customer and supplier. Given the deeply integrated European vehicle and component supply chain, we need Brexit negotiators on both sides to recognise the importance of barrier free trade for the European automotive industry. Any disruption to this risks undermining one of the EU’s most valuable economic assets. The industry needs certainty so an interim deal, maintaining UK single market and customs union membership until we have in place the complex new agreement with the EU, must be a priority for the UK in its withdrawal negotiations.”