UK car production continued to decline sharply in June - SMMT

According to the report from Society of Motor Manufacturers and Traders (SMMT), UK car production declined -48.2% in June with 56,594 units made. Although post-shutdown production slowly ramped up in the month, strict social distancing measures and weak demand across global markets continued to restrict output.

June manufacturing for the domestic market was down by -63.8%, reflecting the gradual easing of the UK’s retail lockdown.1 Production for export also fell, by a substantial -45.0%, although overseas orders accounted for nine out of 10 vehicles built as key global markets, including in the EU, China, US, South Korea and Japan, opened for business earlier than the UK.

While June marked a vast improvement on April and May, when only a combined 5,511 cars were built, the performance rounded off the worst first six months for UK car production since 1954. Just 381,357 cars have been built since January, a decline of -42.8% and representing a loss of 285,164 units.

As a consequence of the crisis, at least 11,349 job cuts have already been announced across the industry, including manufacturing, supply chain and retail. Furthermore, new analysis suggests car production losses could total 1.46 million units by 2025 – worth just over £40 billion – if no FTA is in place by the end of 2020, forcing the sector to trade on WTO terms with full tariffs applied.

Significant questions remain about the nature of trading conditions from 1 January, with uncertainty about customs procedures, regulation and damaging tariffs causing real concern. According to the latest survey of SMMT members, this lack of clarity is now severely hampering nine in 10 companies’ (93.5%) ability to prepare for the end of the transition period.

The coronavirus crisis has exacerbated this, with six in 10 (61.3%) automotive companies saying Covid-19 has diverted resources away from Brexit preparations, while more than seven out of 10 (77.4%) view securing a tariff and quota free FTA as crucial to their future success.