Falling demand in the UK car market dragged UK car production down in February according to the latest data from the SMMT.
Car output in February was down 4.4% to 145,475 units. Exports were steady, just 0.8% down, but production for the home market fell for the seventh consecutive month, with output for the UK down 17% to 28,336 units.
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Overall year-to-date output declined by 2.3%, with 292,956 units rolling off production lines in the first two months of 2018; output destined for the UK market was down 11.9% and exports were steady, up 0.3% on 2017.
Mike Hawes, SMMT Chief Executive, said: “Another month of double digit decline in production for the UK is of considerable concern, but we hope that the degree of certainty provided by last week’s Brexit transition agreement will help stimulate business and consumer confidence over the coming months.
“These figures also highlight the scale of our sector’s dependency on exports, so a final deal that keeps our frictionless trade links with our biggest market, the EU, after December 2020 is now a pressing priority.”
Headwinds for UK car manufacturing but some ‘encouraging signs’
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By GlobalDataStuart Apperley, Director and Head of UK Automotive at Lloyds Bank Commercial Banking, said: “This year has begun as 2017 ended, with the UK car production industry facing headwinds on a number of fronts.
“Domestic consumers – while not an enormous part of the demand for British-built cars – are tightening their belts after a year of rising prices and sluggish wage growth, while confusion over diesel cars is also weighing heavily on sales globally.
“Meanwhile, continued uncertainty over what a post-Brexit industry might look like is hampering investment and, in some cases, causing some manufacturers to reevaluate the number of jobs needed here in the UK.
“There are encouraging signs, however. Economic stability across Europe has helped sales on the continent continue to climb, while inflation at home may also be starting to plateau, which could in turn release the pressure on consumer spending here in the UK.
“Any of those elements may turn out to provide car makers in the UK with some welcome good news – but nothing would be as positive as greater clarity of what the industry will look like post-Brexit.”
Justin Benson, Head of Automotive at KPMG in the UK, also picked up on the opportunity for export growth. “For manufacturers there is opportunity in the numbers,” he said. “Exports remain robust at historically high levels. Some 80% of vehicles made in UK are exported, and with strong overseas economies such as the USA and China, our automotive manufacturers can take full advantage of their great brands and the value of the pound to continue to grow robust sales overseas.”
See also: ‘Critical investment decisions’ loom for UK auto sector
