UK car production fell to lowest level since 1984
Coronavirus pandemic slumps production by 29%, “worst in a generation,” industry experts say.
Car production in the UK fell to its lowest level since 1984 last year amid shocks caused by the coronavirus pandemic. Nissan vies with Jaguar Land Rover for the title of the largest British automaker.
The volume of production of British car factories fell by 29% compared to last year – to about 921 thousand units. For the first time since the crisis year of 2009, annual production fell below the threshold level of 1 million vehicles.
Steel numbers «the worst in a generation», stated Mike Hawes, executive director of the Society of Automobile Manufacturers and Dealers (SMMT), an industry lobby group that collected market data.
All major auto factories in Europe closed at the start of the pandemic, and in the UK some factories remained closed for months as the country introduced new social distancing measures. UK car sales in 2020 were the lowest since 1992. This has impacted overall demand, with a fifth of UK-made cars settling on the domestic market..
A 300,000-unit drop in auto production means the industry lost about £ 10.5 billion in revenue from 2019, Hawes said..
The recession has had a major impact on workers, with at least 10,000 auto jobs lost during the year. However, this figure can only be «the surface of the iceberg», said Hawes. Latent unemployment could arise in supply chains where smaller companies may have had no choice but to cut staff.
All major car manufacturers in the UK have experienced a sharp decline in production. Vauxhall’s endangered Ellesmere Port plant nearly halves Astra production.
Production at three Jaguar Land Rover car plants fell 37% to 244,000 vehicles. This means that the company was overtaken by Nissan, whose plant in Sunderland produced 246 thousand vehicles. Jaguar Land Rover experienced particular production difficulties at the Castle Bromwich plant in the West Midlands.
Nissan’s status as the largest car manufacturer in the UK was achieved shortly after its COO Ashwani Gupta took over the responsibility of producing cars in Sunderland. He said the Brexit deal would give the company a competitive edge over UK rivals..
The UK exit from the EU single market on 31 December poses challenges for the industry. Finding parts from outside the EU, moving personnel across the Channel and obtaining safety permits for various models will become more difficult.
There have also been significant delays in UK ports, disrupting vehicle supply chains focused on on-time delivery to auto factories. Many automakers are turning to aviation to deliver parts, Howes said. Bentley and Jaguar Land Rover previously announced such plans.
Hawes commented on government statements that minimized the negative impact of Brexit on manufacturers. Prime Minister Boris Johnson said that «there will be no non-tariff barriers to trade», and that port delays are «temporary problems».
«There are non-tariff barriers, Hawes said. – I would not characterize this as temporary difficulties, because this is a system that will operate in the foreseeable future».
Some of the more notable obstacles include administrative requirements for import and export, paperwork such as certificates and customs declarations. The expert believes that these obstacles will entail «additional costs that industry will have to bear in the foreseeable future».
«They [car manufacturers] are working hard to keep supply chains going, he said. – As an industry, we were prepared as well as any other sector, but this does not mean that we could be fully prepared».
Howes said the industry «more optimistic about 2021» in the hope that vaccines will help the economy recover. In addition, the Brexit deal reached on Christmas Eve removed the threat of imposing trade duties on most of the UK’s exports – at least in the short term..
Investment performance has been another reason for cautious optimism, with pledges of £ 3.2bn in 2020 rebounding to pre-Brexit levels. However, those numbers were spurred on by Britishvolt, a start-up looking to build «gigafactories» car batteries, which has yet to fund its £ 2.6bn promise.
How Covid-19 killed the car industry as we knew it
Consulting firm AutoAnalysis predicts UK production will grow to over 1 million vehicles during 2021, but SMMT has acknowledged there are risks to this recovery. Final summer closure of Honda’s Swindon plant will add more negativity and severe blow to the car supply chain.