UK car production is being hit by a slump in overseas orders as the Covid pandemic and associated economic impacts persist

UK car production is being hit by a slump in overseas orders as the Covid pandemic and associated economic impacts persist

UK car manufacturing output fell by 55 in September to 114,732 units – the lowest level for 25 years, according to data released by the SMMT.

The SMMT noted that production for export was down by almost 10% at 87,533 units as companies continued to wrestle with the uncertain economic and political environment and COVID-related challenging global market conditions. 

Exports to key overseas destinations, including China, the EU and US fell 1.2%, 3.3% and 30.0% respectively.

One bright spot: Production for the UK climbed 14.5%, equivalent to a rise of 3,440 vehicles, largely as a result of new model introductions that were in run out in the same month last year.

After the first nine months of 2020, UK car production has dropped 35.9% behind 2019 levels, with 632,824 vehicles built. The latest independent outlook forecasts factories to make fewer than 885,000 cars this year – the first time volumes will have dipped below one million since 2009.

Bucking the overarching trends, September production of the latest battery electric vehicles (BEVs) grew 37.0% year-on-year, with the overwhelming majority (76.6%) exported, many of these into the EU.

The SMMT said that with the prospect of 'no deal' still on the table, these figures come as SMMT analysis shows how a 10% World Trade Organisation (WTO) tariff would increase the cost of UK-made electric cars exported to the EU by an average GBP2,000 per vehicle.

The SMMT said tariffs on EU bound car shipments would make the country a less attractive destination for international investment and severely damage industrial competitiveness at the worst possible time.

With countries across Europe experience a surge in COVID cases, and with local lockdowns already in place across many parts of the UK and beyond, the final quarter of 2021 looks increasingly challenging, the SMMT warned.

Mike Hawes, SMMT Chief Executive, said: "These figures are yet more grim reading for UK Automotive as coronavirus continues to wreak havoc both at home and in key overseas markets. With the end of transition now just 63 days away, the fact that both sides are back around the table is a relief but we need negotiators to agree a deal urgently, one that prioritises automotive, enhances innovation and supports the industry in addressing the global threat of climate change. With production already strained, the additional blow of 'no deal' would be devastating for the sector, its workers and their families."

UK car production, September 2020

September 2019September 2020% ChangeYTD-19YTD-20% Change
Total120,729114,732-5.0987,642632,824-35.9
Home23,75927,19914.5197,040120,770-38.7
Export96,97087,533-9.7790,602512,054-35.2
% export80.376.3NA80.080.9NA

Source: SMMT