UK automotive sector hit by Brexit and diesel concerns
A perfect storm of negative factors, blown by Brexit winds, saw UK car production and investment decline sharply last year.
Fresh inward investment in car manufacturing crashed in 2018, down to £588.6 million, a fall of 46.5% compared to the previous 12 months, as OEMs delayed decisions until the UK’s post-Brexit trading prospects with the European Union and other major markets become known.
At the same time, both domestic and international sales faced difficult conditions. In the UK, concerns over Government policy and the taxation of diesel vehicles hit fleet and consumer demand, with demand for UK-built cars down by 16.3%.
In the export market, demand from EU nations fell by 9.6%, while a slow down in the Chinese economy saw exports to China tumble by 24.5% compared to 2017. Overall, the export market was down by 7.3% to 1,273,608 cars.
Fall in production
Official figures unveiled today reveal that the UK produced 1,519,440 new cars in 2018, compared to 1,671,166 in 2017, a fall of 9.1%. Overall, 81.5% of these cars were exported. The downturn follows a succession of growth years for the UK automotive industry, which saw car production rise by 70% between 2009 and 2016.
The best-selling UK produced cars are the Nissan Qashqai, MINI, Honda Civic, Toyota Auris and Vauxhall / Opel Astra.
Jaguar Land Rover produces the highest volume of cars in the UK, manufacturing 449,304 cars last year, down 15.6% on 2017. The company has already announced an additional week of production stand-down in April, “due to potential Brexit disruption”, and earlier this month unveiled plans to cut its global workforce by 4,500 as part of an efficiency drive.
Prof. Dr. Ralph Speth, chief executive officer of Jaguar Land Rover, said, “We are taking decisive action to help deliver long-term growth, in the face of multiple geopolitical and regulatory disruptions as well as technology challenges facing the automotive industry.”
There was better news in other global markets, with exports to the Unitedf States up 5.3%, to Japan up by 26% and to South Korea up 23.5%.
Brexit jeopardises many of these exports, not simply to the EU, but also to countries such as Japan, South Korea, Canada and Turkey, which have (or are soon to sign) trade agreements with the EU.
Mike Hawes, chief executive of the SMMT, said, “With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert. Brexit uncertainty has already done enormous damage to output, investment and jobs.
“Yet this is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely.
“Given the global headwinds, the challenges to the sector are immense. Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from ‘no deal’.”
Commercial vehicle production rises
UK commercial vehicle production had a better year, up 8.5% to 84,888 vehicles, while engine manufacturing was stable, down just 0.3% year-on-year in 2018 to 2,715,400 units.