June’s manufacturing figures have revealed a sharp 47.2 per cent decline in the number of cars built for the UK domestic market. Of the 128,799 cars made here in June, just 15,647 went to UK buyers, compared to 29,631 in June 2017.
The number of cars built in the UK for export grew by 6 per cent, but that increase wasn’t enough to offset the decline in domestic production, with a total of 5.5 per cent fewer cars made in the UK compared to June 2017. Year-to-date figures show car manufacturing down 3.3 per cent for the first half of 2018.
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Industry chiefs were quick to point out June’s drop in domestic production was not a reflection of declining sales, though. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), said: “We view it as exceptional, and a combination of different issues. It is not a drop in expected demand, because you’re not seeing it on the forecourts; the sales numbers are reasonably strong, they’re where we expect them to be.”
Hawes admitted the automotive industry was “surprised at the severity” of the decline, but cautioned: “June’s results demonstrate the risks of judging automotive performance one month in isolation.” Hawes added with some factories “on shutdown” over August, production improvements were unlikely to be immediate, but could be expected “certainly by the autumn”.
Hawes cited delays in certifying cars to the new WLTP emission and economy standards as partly to blame for the fall in cars produced for the domestic market. The new introduction of WLTP gave car makers 13 months to re-test and recertify all their cars by September 2018.
Hawes explained EU warnings that the UK’s Vehicle Certification Agency (VCA) is set to lose the ability to certify cars for the EU after Brexit could be adding further to these delays. “Given the uncertainty of the validity of VCA approvals, I would suggest the majority [of manufacturers] are using other testing facilities, which is putting more strain on finite capacity.”
But WLTP certification issues weren’t solely to blame for the 47.2 per cent fall. Citing a “perfect storm” of contributing factors, Hawes said, “model cycles and operational changes” also had a part to play. Asked what the most significant factor in the decline was, he said: “it varies from manufacturer to manufacturer. Each manufacturer faces a combination of issues in different proportions. For some, with WLTP, they’re through it, others are still in the middle of it, some are changing models, others are adjusting stock levels or diverging more to exports…there’s no hard and fast [explanation].”
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There were some green shoots of optimism in June’s figures, however. The number of cars made in the UK for the Japanese market rose by 77.3 per cent, while South Korean exports increased by 68.8 per cent.
Hawes reiterated that the UK’s car manufacturing industry was heavily dependent upon European trade, with 53.4 per cent cars made here destined for EU countries. He also highlighted the UK’s status as the second-largest European car market (after Germany), with 69.1 per cent of cars purchased in the UK in the first six months of 2018 coming from European factories.
Calling current Brexit proposals “a step in the right direction”, Hawes said: “We now look to negotiators on both sides to recognise the needs of the whole European automotive industry which, combined, employs more than 12 million people. Any disruption risks undermining one of our most valuable shared economic assets.”
Do you think the fall in UK car manufacturing is a blip or a sign of things to come? Let us know in the comments...
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