UK car production falls 20 per cent in first six months as data reveals £330 million no-deal mitigation bill
British car manufacturing output fell by more than a fifth in the first half of 2019, with a 15.2 per cent decline in June marking the 13th consecutive month of negative growth, according to figures released by the SMMT.
666,521 cars rolled off production lines in the first six months of the year, a year-on-year loss of 168,052 units due largely to falling demand in key markets, including the UK, exacerbated by factory shutdowns pulled forward in anticipation of the March Brexit deadline.
In June, output for the UK rose by 2,791 units following an anomalous 47.2 per cent decline in the same month of last year when preparation for the new WLTP emissions test impacted volumes.
However, the underlying trend remains downward, with year-to-date production for the domestic market down 16.4 per cent.
The news comes as further SMMT research has shown the substantial cost to industry of no-deal Brexit preparations, with at least £330 million having been spent by the sector on contingency plans.
Most major UK manufacturers have tied up working capital stockpiling materials and components, securing warehousing capacity and investing new logistics solutions, additional insurance, and training in new customs procedures.
Significantly, many manufacturers have moved annual plant shutdowns from the summer to April, a measure which cannot be repeated for the proposed October departure date.
Meanwhile, latest figures show inward investment into the sector effectively stopped in the first half of the year.
In the period of January to June, newly pledged investment was down more than 70 per cent, to £90 million, contrasting with the average annual investment figure of £2.7 billion over the previous seven years.
Mike Hawes, SMMT Chief Executive, said: “Today’s figures are the result of global instability compounded by ongoing fear of no-deal. This fear is causing investment to stall, as hundreds of millions of pounds and diverted to Brexit cliff-edge mitigation, money that would be better spent tackling technological and environmental challenges.”
“The industry’s foundations are fundamentally strong, however, and we’re ready to work with the new government to build on these through the industrial strategy. We need an internationally competitive business environment to encourage more investment, more innovation, and more growth.”
“That starts with an ambitious Brexit deal that maintains frictionless trade and we look to the new administration to get a deal done quickly so manufacturers can get back to the business of building cars and helping deliver a brighter future for Britain.”