Huge fall in number of cars built in UK last year

The number of new cars built in the UK last year fell by almost a third to less than a million, the lowest total since 1984, leading to the loss of thousands of jobs, new figures show.

Production fell by 29.3% compared to the previous year, down to 920,928 units, with similar impacts on the domestic and overseas markets, said the Society of Motor Manufacturers and Traders (SMMT).

Commercial vehicle production fell by 15% and the number of engines built slumped by 27%.

The SMMT said a fall in car production of 2.3% in December rounded off a “dreadful year”, with auto manufacturers hit by the impact of the coronavirus crisis as well as uncertainty for most of 2020 about a Brexit trade deal.

Mike Hawes, SMMT chief executive, said declared job losses last year by carmakers and firms in the supply chain were around 10,000.

He said manufacturing operations were “severely disrupted” throughout 2020, with lockdowns and social distancing measures restricting factory output, Brexit uncertainty continuing until Christmas Eve and depressed overseas demand.

Despite the impact on trade of the global pandemic, more than eight in 10 of all cars made in the UK were shipped overseas, with the EU remaining the biggest export destination, taking a 53.5% share.

Shipments to the US, Japan and Australia all fell, down 33.7%, 21.6% and 21.8% respectively, while exports to China ended the year up 2.3%.

Combined production of battery electric (BEV), plug-hybrid (PHEV) and hybrid vehicles (HEV) increased to 18.8% of all cars made in this country, up from 14.8% a year before.

Just under 173,000 alternatively fuelled vehicles were built last year, with four out of five exported.

Mr Hawes described 2020 as a “very challenging year”, but he said there was optimism for 2021 because of the coronavirus vaccine, more clarity on technology and the last-ditch Brexit trade deal, even though it left exporters facing some extra costs.

Commenting on the slump in production, he said: “These figures, the worst in a generation, reflect the devastating impact of the pandemic on UK automotive production, with Covid lockdowns depressing demand, shuttering plants and threatening lives and livelihoods.

“The industry faces 2021 with more optimism, however with a vaccine being rolled out and clarity on how we trade with Europe, which remains by far our biggest market.

“The immediate challenge is to adapt to the new conditions, to overcome the additional customs burdens and regain our global competitiveness while delivering zero emission transport.”

Independent forecasts say UK car production will partly recover in 2021 to one million, but Mr Hawes said much will depend on the continued impact of the virus, the speed with which showrooms can reopen, and how quickly manufacturers can come to terms with new trading arrangements with the EU, which he described as “much more complicated”.

He hoped today’s production figures would reflect the “lowest ebb”, but added that significant investment would be needed to return to the figure of 1.7 million reported in 2016.