UK car production fell by 9.1% to 1.52m units in 2018, a five year low for the sector. The output decline was also accompanied by the news that fresh investment in the UK automotive sector was almost halved last year amid ongoing uncertainty over future trading arrangements between the UK and EU when the UK exits the trade bloc on 29 March.
The SMMT said it is urging all politicians to do “whatever it takes to avoid a ‘no deal’ Brexit” which would likely result in new trade tariffs applying between the UK and EU as well as new checks on cross-border shipments that could disrupt and add cost to pan-European automotive supply chains.
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The SMMT said that fresh inward investment in the sector in 2018 was down by 46.5% on 2017 to just GBP588.6m, amid fears over the UK’s future trading prospects with the EU and other key global markets after 29 March.
In 2018, car production for the domestic UK market fell 16.3% as regulatory changes and ongoing uncertainty over future diesel policy and taxation were exacerbated by declining consumer and business confidence. Exports were also down, with output for overseas markets dropping 7.3% as slowdowns in important European and Asian markets took effect.
UK car exports to China were down 24.5%, while EU demand fell by 9.6%, less steep than the decline at home, with registrations of British-built cars in the UK down 20.9% in the year. Overall, EU27 countries still accounted for the vast majority of UK exports (52.6%) – amounting to 650,628 cars.
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Elsewhere, consumers responded to increased availability of several new premium models currently built only in the UK. Exports to the US grew +5.3%, cementing the country’s position as the UK’s second biggest customer after EU and underlining the risk to output if tariffs are imposed.
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By GlobalDataMeanwhile, exports to Japan rose 26.0% and South Korea also showed growth (+23.5%). Both countries, along with other key markets, including Canada and Turkey, are (or will imminently become) subject to preferential EU trade agreements, from which the UK benefits – together representing 15.7% of UK car exports.
‘Time running out’
The SMMT warned that time has almost run out to guarantee continuity – for the UK – of preferential EU trade agreements before Brexit, and said that ‘no deal’ could therefore put more than two thirds of UK Automotive’s global trade under threat.
Mike Hawes, SMMT Chief Executive, said: “With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert. Brexit uncertainty has already done enormous damage to output, investment and jobs. Yet this is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely. Given the global headwinds, the challenges to the sector are immense. Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from ‘no deal’.”
The SMMT also said that a ‘no-deal’ Brexit is the most significant threat to the competitiveness of the UK automotive sector in a generation.
