UK car output is being hit by lower export demand as pandemic effects continue

UK car output is being hit by lower export demand as pandemic effects continue

UK car production was down 18.2% in October as output was hit by sharp declines in export demand from the EU and US markets, according to data released by the SMMT.

Output so far this year is down by 33.8% with some 379,308 fewer cars made than same period in 2019.

The UK's auto industry trade association, the SMMT, called for an urgent Brexit agreement - to include a UK-EU free trade deal - with details shared swiftly, and adequate time to implement the deal, to help companies prepare for the end-of-year closing of the UK's Brexit withdrawal transition period.

October's monthly decline was driven largely by falling exports, particularly to the EU and US, down 19.1% overall and equivalent to a loss of 21,569 vehicles. Shipments to the US fell by 26.0% and to the EU by 25.7%. Major Asian markets fared better, with exports to Japan and China up 57.1% and 9.7% respectively, reflecting less stringent lockdown measures, but this was not enough to offset losses elsewhere. Production for the domestic market also fell, by 13.6% to 18,629 units, with 2,921 fewer cars made for buyers in the UK than a year earlier.

The SMMT noted that October's performance rounds off an extremely tough 10 months for UK car makers and suppliers, and production is now down 33.8% since January to 743,003 units – a year on year shortfall of 379,308 units worth some GBP10.4bn.

Mike Hawes, SMMT Chief Executive, said: "These figures are yet more bad news for an industry battered by Covid, Brexit and, now, the unprecedented challenge of a complete shift to electrified vehicles in under a decade. While the sector has demonstrated its resilience, we need the right conditions to remain competitive both as a manufacturing nation and a progressive market. Yesterday's [UK Government] Spending Review recognised the need to invest in a green industrial revolution, but this must be at globally competitive levels and equal to the scale of ambition to keep this sector match fit. Above all, we must have a Brexit deal, one with zero tariffs, zero quotas and rules of origin that benefit existing products and the next generation of zero emission cars, as well as a phase in period that allows this transition to be 'made in Britain'."

In the event of 'no deal', the SMMT estimates that production losses could cost as much as GBP55.4bn over the next five years, and even with a so-called 'bare-bones' trade deal agreed, the cost to industry would be an estimated GBP14.1bn.

UK car production, October 2020

October 2019October 2020% ChangeYTD-19YTD-20% Change
Total134,669110,179-18.21,122,311743,003-33.8
Home21,55018,629-13.6218,590139,399-36.2
Export113,11991,550-19.1903,721603,604-33.2
% export84.083.1NA80.581.2NA

Source: SMMT

See also: No deal Brexit could axe 2m production over five years says SMMT