Some commentators are hoping that the UK government will raise incentives for the purchase of electric vehicles such as the Nissan Leaf, made in Sunderland

Some commentators are hoping that the UK government will raise incentives for the purchase of electric vehicles such as the Nissan Leaf, made in Sunderland

UK car output fell by 16.8% in September according to the latest data issued by the Society of Motor Manufacturers and Traders (SMMT). The trade association said some 25,610 fewer cars rolled off production lines than in the same month last year, capping off a turbulent first three quarters as global trade tensions, model changes and uncertainty over diesel and Brexit were exacerbated by testing backlogs due to new emissions regulations (WLTP).

September production fell for both home and overseas markets, down year on year by a respective 19.0% and 16.2%. However, exports continued to drive volumes, accounting for eight out of every ten cars produced. In the year to date, overall output has declined by 6.6%, with the decline driven predominantly by falling UK demand, currently down 18.6%, but compounded by slower growth across Europe.

Mike Hawes, SMMT Chief Executive, said: "Today's figures highlight the many competing challenges facing UK Automotive. It has been a turbulent year and the industry needs stability, something which appears elusive given the lack of resolution to Brexit negotiations. The UK government has recognised the importance of a deal that maintains free and frictionless trade with the EU, but it is up to all sides to deliver this to safeguard the hundreds of thousands of jobs depending on the sector.

"Stability is also needed at home and a stronger UK new car market would go a long way to boosting manufacturing output. The Chancellor's Budget next week is the perfect opportunity to stimulate the market, sending consumers and businesses the right signals to encourage the purchase of new cars, which would help bolster economic performance as well as delivering environmental goals."

Justin Benson, Head of Automotive at KPMG UK noted that incentives for electric vehicles could help to lift the UK car market. He said: "Whilst exports continue to be the most significant driver for the majority of cars produced in the UK, the domestic market is the main contributor to the reduction in volume. New models, such as expensive electric vehicle models, aren't helping the situation either. So it would be a pleasant and very welcome surprise for carmakers next week if the Chancellor announces an incentive for consumers to buy very low emission vehicles."

He also highlighted the problem of ongoing Brexit uncertainty. "In the meantime, Brexit and continuing uncertainty is making consumers think twice about making major purchases and KPMG's recent survey of the public in the event of a 'no deal' scenario found that almost half (47%) of the public expect to delay such purchases," he said. "While this means great offers on cars will continue, levels of consumer confidence are directly aligned to vehicle purchases. If there is certainty then confidence should increase, which will hopefully see an improvement in car production and sales."

UK car production, September 2018

Sept 17Sept 18% ChangeYTD-17YTD-18% Change
Total152,661127,051-16.81,254,3521,171,765-6.6
Home31,39225,440-19.0270,685220,317-18.6
Export121,269101,611-16.2983,667951,448-3.3
% export79.480.0NA78.481.2NA

Source: SMMT

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