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UK car production down 9.1% in 2018 to five-year low: SMMT

  • Author
  • Andy Blamey
  • Editor
  • Jonathan Dart
  • Commodity
  • Metals

London — UK car production fell to its lowest for five years in 2018, with 1,519,440 new cars leaving UK factories, a drop of 9.1% from the previous year, figures from the Society of Motor Manufacturers and Traders showed Thursday.

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This marks the second consecutive annual fall as the sector "faces multiple challenges," SMMT said, adding that the fall in UK car manufacturing in 2017-18 follows "seven years of unprecedented growth for the sector as it emerged from recession faster than any other major EU market," with output rising more than 70% in that time.

"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," SMMT CEO Mike Hawes said.

"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," he said.

"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,'" Hawes added.

In 2018, car production for the UK fell by 16.3% as regulatory changes and ongoing uncertainty over future diesel policy and taxation were exacerbated by falling consumer and business confidence, SMMT said.

Exports were also down 7.3% as slowdowns in important European and Asian markets took effect. UK car exports to China slumped 24.5%, while EU demand fell by 9.6%; overall, EU27 countries still accounted for the vast majority of UK exports (52.6%) or 650,628 cars, it added.

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," SMMT said.

Meanwhile, exports to Japan rose 26% and South Korea also showed growth, rising 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," SMMT said.

"Time has almost run out to guarantee continuity of any of these arrangements before Brexit, and 'no deal' could therefore put more than two-thirds of UK Automotive's global trade under threat," it added.

The group also noted that fresh inward investment in the sector plummeted last year, down almost half (46.5%) on 2017 to GBP588.6 million ($772.6 million) on fears over the UK's future trading prospects with the EU and other key global markets after March 29.

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Commenting in the SMMT figures, Stuart Apperley, director and head of UK automotive at Lloyds Bank Commercial Banking, said "there's no doubting that UK carmakers are facing into a number of strong headwinds."

Many depend on frictionless trade, and "manufacturers will fear anything that disrupts that, but slowing sales in China, Europe and the UK are arguably a more immediate threat," Apperley said. "The potential for US tariffs on imports of European cars could also have a detrimental impact on those UK firms that make models and parts for the US market."

Without strong sales of their existing models, "carmakers will find it difficult to invest in the technology that will one day power electric and autonomous vehicles," he said, adding: "With governments around the world stalling on giving strong backing for diesel in particular, consumers and businesses are parking their investment decisions too."

While some of the headwinds carmakers are facing are cyclical, "manufacturers would certainly welcome a little certainty about either their future trading relationships or the future of diesel," Apperley said.

-- Andy Blamey,

-- Edited by Jonathan Dart,