UK car production fell 41.5% in September, the third consecutive month of decline, with 67,169 cars manufactured, the worst September result since 1982, the Society of Motor Manufacturers and Traders (SMMT) said.

Output continued to be hampered by production stoppages caused by the ongoing global shortage of semiconductors as well as the loss of production capacity arising from the closure of “one of the UK’s larger plants” – Honda shut its Swindon factory mid-year.

The budget confirmed GBP817m of funding for automotive manufacturing “transition” and business rate relief on renewable energy, but the auto industry continues to battle against the ongoing effects of the pandemic, the SMMT said.

A member survey found 83% of auto making companies have been negatively impacted by the situation, primarily due to reduced orders, cost increases, logistics delays and disruption.

The supply chain has spent GBP2.4bn so far managing additional costs which are unlikely to be recovered, with most (56%) not expecting supply constraints to improve until the third quarter of 2022 and more than a third (38%) having to reduce operating hours to cope with the challenge.

Around 10% have made redundancies and/or restructured their businesses as a direct result of the lack of semiconductors while some six in 10 (65%) SMEs sought an extension to the Coronavirus Job Retention Schemes, highlighting the fact that, although the pandemic may be receding, its impact on the sector is still pronounced.

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By GlobalData

Despite the ongoing challenges, production of battery electric (BEV), plug-in hybrid (PHEV) and hybrid (HEV) cars continued to break records in September, accountng for almost a third (32.3%) of all cars made, equivalent to 21,679 units.

Production for both domestic and export sale fell significantly during the month, down 47.4% and 39.6%, respectively with just 52,872 cars exported. The decrease was caused by a decline of exactly a third to the EU as well as falls in shipments to Turkey, Australia and the USA which dropped 97.4%, 71.4% and 60.2% respectively.

Production year-to-date remained up marginally, by 3.8%, with 656,776 cars built, with 82.7% of output exported.

The YTD tally was down 33.5% over 2019 and off 44.1% when compared to the five-year pre-pandemic average.

Mike Hawes, SMMT chief executive, said: “The substantial decline in UK car output in September continues the worrying trend we have seen over the past three months. The industry is continuing to battle the effects of the pandemic with the shortage of semiconductors stalling production.”