UK new car production fell 41.4 per cent year-on-year last month to its lowest level in October in 65 years as the global shortage of semiconductor chips and factory shutdowns hit the sector, according to the latest report from the industry trade body. .
Data from the Society of Automobile Manufacturers and Traders (SMMT) on Friday showed a total of 64,729 cars rolled off the British production lines.
The drop reflects global supply chain problems and Honda’s permanent shutdown of its plant in late July and its lowest production in the UK in October since 1956.
UK car production slumps to 65-year low: A total of 64,729 cars rolled off British production lines last month – lowest in October since 1956, record show
A shortage of semiconductor chips means that automakers are unable to produce enough cars to meet massive consumer demand – which in turn causes huge delays to deliveries.
Auto production in the first 10 months of the year was 721,505 cars, down 2.9 per cent from 2020 when sites were closed for several months as the coronavirus pandemic spread in Britain.
SMMT, citing an independent forecast by AutoAnalysis, said full-year auto and truck production will be below 1 million for the second year in a row, but is expected to return to above that level in 2022.
While overall production decreased, production of electrified vehicles remained well.
Battery electric vehicles (BEVs), plug-in hybrids (PHEVs) and plug-in hybrids (HEVs) accounted for nearly one in three vehicles (30 per cent) that rolled off the UK assembly lines in October.
The month saw output of zero-emission models surpass 50,000 for 2021 — more than 43,790 pure electric vehicles were produced in the pre-pandemic period in all of 2019, as electric vehicle manufacturing rose 17.5% to 8,454 units.
While overall production has declined, production of electrified vehicles – such as the Oxford-built Mini’s Electric – has remained well
Commenting on the manufacturing figures released this morning, SMMT CEO Mike Howes described the figures as “extremely worrying” and said they “show the extent to which the global shortage of semiconductors is affecting UK car manufacturers and their suppliers”.
He added: “Britain’s auto sector is resilient, but with the resurgence of Covid across some of our largest markets, global supply chains stretching and even collapsing, the immediate challenges in keeping the industry running are enormous.”
Richard Pepperdy, head of UK automotive division at KPMG, said a shortfall in semiconductor chips meant that automakers “have to prioritize models and markets”, and cautioned that this was likely to continue into 2022.
“Increasing inflationary pressures only add to this difficult picture, leading to revised forecasts,” he explained.
“But while there are fewer cars leaving the factory, those that do are selling out quickly and at less discount than historically required.
Demand continues to outpace supply, and by the time these supply chain issues ease, there will likely be a lot of pent-up demand to meet in the front yards.
“But for now, that path will remain out of reach for a number of automakers.”
Auto chiefs called on the government to provide more support to the sector, which is one of the largest in the country and employs more than 790,000 people.
SMMT used the findings to once again call on the government to support the industry with measures to increase competitiveness with global competitors, in ‘addressing high energy costs, supporting employment and training and helping companies whose cash flow is under pressure from historically weak production numbers’.
echoed Jim Holder, Managing Editor of What Car? , calls for additional support for the sector as supply shortages continue to stifle its recovery from last year’s pandemic-hit outputs.
“The UK car sector is one of the largest industries in the country, with sales of £60.2 billion and more than 790,000 people,” Holder said.
Adding up to £11.9 billion to the UK economy each year, the sector is in crisis and needs government support to grow again.
It is estimated that the shortage of microchips will continue well into 2022, and the industry cannot maintain similar performance as today in the long term.
Support will be needed, from helping to invest in new electric vehicle plants, to improving business rates and energy prices, as well as lowering trade costs against competitors elsewhere. With the UK moving towards electric cars, this support is more important than ever.
Van production rises in October
While UK passenger car manufacturing fell to a 65-year low, production of vans and commercial vehicles increased by 17.2 per cent.
About 7,892 units were built in October, according to SMMT, the highest monthly increase since June of this year.
It comes on the heels of a poor October 2020 as operators delayed fleet renewal due to issues related to the pandemic and uncertainty over a no-deal Brexit.
The increases in production were driven by domestic demand, which grew by 29.8 percent, while the number of trucks designed for export increased, but by a more modest 6.8 percent.
So far in 2021, about 58,813 commercial vehicles have been produced in Britain – an increase of 15.6 per cent compared to Covid hit 2020.
However, compared to the five-year average before the coronavirus, production is still down 18 percent, with staff shortages earlier in the year and the continuing impact of semiconductor shortages limiting production.
Mr Hawes said: “The significant growth in resume production during October is welcome news, but should be viewed in context compared to a weak month in 2020.
This sector is not immune to the ongoing challenges caused by the pandemic, most notably the shortage of semiconductors, and there remains a lot of uncertainty in the coming months.
UK manufacturers are committed to doing everything they can to keep production lines running, getting more of the newest and cleanest CVs on our roads, and promoting fleet renewal that will go a long way to improving urban air quality.
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