Lower demand from major export markets contunues to dent UK output versus year-ago levels - though that year-on-year comparison will swing the other way in the coming months

Lower demand from major export markets contunues to dent UK output versus year-ago levels - though that year-on-year comparison will swing the other way in the coming months

UK car production fell 27.3% in January to 86,052 units, according to the latest figures issued today by the Society of Motor Manufacturers and Traders (SMMT). Although it was another poor monthly output level in a run of weak results hit by the pandemic, there was another positive for electrified vehicles, output of which continues to rise. 

The SMMT said it was the worst January performance overall since 2009, and a 17th consecutive month of decline. Multiple factors, including the ongoing effects of the pandemic, global supply chain issues, extended shutdowns and friction in the new trading arrangements following the end of the Brexit transition period, affected output.

Car manufacturing for both home and overseas markets was down in January, to 16,692 and 69,360 units respectively, representing falls of 18.3% and 29.1%. While exports still accounted for more than eight in 10 of all cars made in the month, shipments to major markets the EU, US and Asia all fell by double digits, down 26.2%, 34.5% and 36.1%.

In better news, the growth in UK production of battery electric (BEV), plug-in hybrid (PHEV) and hybrid vehicles (HEV) seen in 2020 continued, with combined output of these vehicles rising 18.9% in January to 21,792 units. This means more than one in four (25.3%) of all cars leaving factory gates was alternatively fuelled, further evidence of the UK's growing capability in ultra-low and zero emission vehicle manufacturing.

The news comes as the sector counts the GBP11.3n cost of lost car production since March 2020. Whilst manufacturing businesses remain open, weak demand hindered by the ongoing closure of new car showrooms is affecting production volumes.

The SMMT said it is urging the Chancellor (the UK's finance minister) to use next week's Budget to announce measures that enhance UK automotive manufacturing competitiveness, with an extension of Covid-19 business support schemes including the CJRS furlough, amendments to business rates reform to incentivise manufacturing investment and more support for skills and training.  

Mike Hawes, SMMT Chief Executive, said: "Yet another month of decline for UK car production is a grave concern and next week's Budget is the Chancellor's opportunity to boost the industry by introducing measures that will support competitiveness, jobs and livelihoods. Whilst there have been some very welcome recent announcements, we need to secure our medium to long-term future by creating the conditions that will attract battery gigafactory investment and transform the supply chain. Most immediately, however, we must get our Covid-secure car showrooms back open, ideally before 12 April. This will be the fastest way to UK automotive manufacturing recovery."