August was another tough month for UK car manufacturing as overseas demand slumped

August was another tough month for UK car manufacturing as overseas demand slumped

UK car production declined by 44.6% in August due to the impact of the ongoing COVID-19 pandemic on economies and car demand. UK car output so far this year is down 40.2% with a loss of 348,821 units worth more than GBP9.5bn to UK car makers.

According to figures released by the Society of Motor Manufacturers and Traders (SMMT), just 51,039 units rolled off factory lines in August as efforts to ramp up production stalled. The SMMT said that weak demand in key overseas markets was compounded by a significant fall in output for UK buyers.

The performance also reflects an unusually strong August in 2019, when some plants worked through the customary summer maintenance shutdown period, instead pausing in April to mitigate the then possible 'no deal' Brexit on 31 March.

Production for UK buyers fell-58.3% in the month to just 7,795 units, while exports followed a similar pattern, declining by 41.1% with 43,244 vehicles produced for overseas markets. Almost 85% of all cars built in Britain in August were destined for countries around the world, underlining the importance of this trade to the sector and UK economy.

The news comes as the UK braces for a second wave of coronavirus, with local lockdowns in place across parts of the country and tighter social and business restrictions to curb the rate of transmission.

The SMMT said that assistance for sectors such as automotive, where many firms cannot operate at full speed, is now critical and the Job Support Scheme, as well as the other financial measures announced this week, come as welcome news. The SMMT also said flexible measures to support short time working and cashflow are essential for automotive businesses while market demand and production capacity remain diminished.

The SMMT also estimates that at least 13,500 jobs have been cut across the entire UK automotive sector in 2020, with a recent SMMT member survey highlighting that one in six auto jobs are at risk of redundancy when the current job support scheme ends.

Mike Hawes, SMMT Chief Executive,?said: "These are increasingly disturbing times for UK car makers and suppliers with the coronavirus crisis weighing heavily on the sector. Companies are bracing for a second wave with tighter social and business restrictions making the industry's attempts to restart even more challenging.

"The UK industry is fundamentally strong and agile, and the measures announced yesterday by the Chancellor are welcome and essential, although we await more details of how they will work for all businesses and crucially large manufacturers. Companies need to retain skilled jobs and maintain cashflow and we may need more support to boost business and consumer confidence later this year. Moreover, with fewer than 100 days until the Brexit transition period ends, we need urgent agreement of an ambitious free trade deal with our largest market to avoid the second shock of crippling tariffs."

UK car production, August 2020

August 2019August 2020% ChangeYTD-19YTD-20% Change
Total92,15351,039-44.6866,913518,092-40.2
Home18,7107,795-58.3173,28193,575-46.0
Export73,44343,244-41.1693,632424,517-38.8
% export79.784.7NA80.081.9NA

Source: SMMT