Figures released by the SMMT show that UK car output declined by 14.2% in 2019 to 1.3m units – the lowest annual total since 2010.
The production decline was mainly driven by lower export demand. Exports for the year declined by 14.7% to 1.05m units (a loss of some 182,000 units over the previous year). There were big declines for Jaguar Land Rover (down by 64,107 units; -14.3%), Nissan (down by 95,719 units; -21.6%) and Honda (down by 51,800 units; -32.2%). However, Toyota saw a 14.7% gain (new Corolla ramp-up) and BMW-owned Mini was down by just 5.2% (see figures by manufacturer below).
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A 6.4% drop to output in the month of December rounded off a third straight year of decline. The SMMT said output was affected by multiple factors, including weakened consumer and business confidence at home, slower demand in key overseas markets, a number of significant model production changes and a shift from diesel across Europe. Factory shutdowns in the spring and autumn, timed to mitigate expected disruption arising from the anticipated departure of the UK from the EU on 29 March and 31 October, also had a marked effect.
Although shipments to the EU27 fell, by 11.1%, the SMMT noted that the EU trade bloc remains the sector’s most important market with its share of exports rising by two percentage points to 54.8%. Meanwhile, trade with the UK’s next largest markets, the US (representing 18.9% of export volumes), China (5.3%) and Japan (3.2%) also fell, with exports down 9.8%, 26.4% and 17.7% respectively.
The UK’s renowned small volume car manufacturing sector, however, bucked the trend with growing demand for some of the world’s most iconic and desirable brands boosting output by 16.2% in the year. Production of alternatively fuelled cars rose, by 34.7% to 192,304 units, as global appetite for the UK’s electric, plug-in hybrid and hybrid offering continues to rise.
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By GlobalDataThe latest independent production outlook downgrades expectations for 2020 to 1.27m units, down from the 1.32m forecast made in November. The SMMT stressed the importance of upcoming negotiations on the future UK-EU trade relationship – and trade deals with the rest of the world – for the competitiveness of the UK’s automotive industry.
Mike Hawes, SMMT Chief Executive, said: “The fall of UK car manufacturing to its lowest level in almost a decade is of grave concern. Every country in the world wants a successful automotive sector as it is a driver of trade, productivity and jobs. Given the uncertainty the sector has experienced, it is essential we re-establish our global competitiveness and that starts with an ambitious free trade agreement with Europe, one that guarantees all automotive products can be bought and sold without tariffs or additional burdens. This will boost manufacturing, avoid costly price rises and maintain choice for UK consumers. Negotiations will be challenging but all sides stand to gain and this sector is up for it.”
Stuart Apperley, Regional Director, Transport at Lloyds Bank Commercial Banking, said: “December’s manufacturing figures end a difficult year for the car industry. Nobody expects a dramatic turnaround in 2020, but the prospect of a more stable political climate will be good for confidence.
“Looking ahead, 2020 could prove the year of the electric vehicle. A raft of new models will offer a wider range of more affordable options for consumers, while Tesla’s rapid rise to become the world’s second most valuable carmaker should prompt others to invest in their electric and hybrid offerings.
“With Brexit a certainty all eyes will be on the progress of trade talks with the EU. With car sales in China continuing to decline, Europe will remain a key market for automotive exports and manufacturers will be hoping for frictionless trade in future.
“While the mood in the wider economy has brightened over the previous few weeks, recent job loss announcements serve as a stark reminder of the issues carmakers still face. Manufacturers know they are not out of the woods yet but they will be hoping 2019 was the nadir for production output.”
