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‘Urgent action needed’ Fears for UK car production as output plummets by a third

Life & Style‘Urgent action needed’ Fears for UK car production as output plummets by a third

UK car manufacturing output has dropped by a third in a year according to worrying figures released by the Society of Motor Manufacturers and Traders (SMMT). The organisation linked the decline to a global shortage of computer chips and rising energy costs for manufacturers.

In the first three months of this year, a total of 207,347 new cars were built in the UK, down from 306,558 in the same three months in 2021, when the Covid-19 pandemic created added pressures for manufacturers.

Mike Hawes, chief executive of the SMMT said that two years after the start of the pandemic, automotive production was “still suffering badly”.

The war in Ukraine is also having an effect on production, with factories struggling to get hold of parts such as wiring systems that would normally come from the region.

And the closure of Honda’s plant in Swindon last year has also been a major factor, and added to a large reduction in the number of cars exported to the US.

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The BBC’s Business Correspondent Theo Leggett said: “The impact of Covid has been huge.

“The car industry relies on very efficient, very streamlined manufacturing systems – where parts arrive from around the world at the factories where they’re needed pretty much exactly when they’re needed.

“But Covid has thrown a huge spanner in the normally smoothly-operating machinery.

“Supply chains have been disrupted and vital parts – particularly computer chips – have not been there when needed. When that happens production has to be slowed or even stopped.

He continued: “Now there are other problems to contend with as well. The war in Ukraine has pushed energy prices sky high – a major problem for the industry. It has also triggered new parts shortages.

“This situation isn’t unique to the UK. But it comes at a time when the car industry here is desperate to put itself at the forefront of the move to electric vehicles – and attract the new investment which was in very short supply during the years of Brexit-related uncertainty.

“Some good news is badly needed.”

Mr Hawes added: “We want the UK to be at the forefront of the transition to electrified vehicles, not just as a market but as a manufacturer so action is urgently needed if we are to safeguard jobs and livelihoods.”

Chris Knight, automotive partner at consultancy firm KPMG, said component and material availability challenges remain, with the problems caused by the pandemic now “added to by conflict in Ukraine”.

He said: “A focus on prioritising available components and materials into higher-margin vehicle production and sales has been to the detriment of some parts of the fleet industry.”

Electric car production has been one area where the trend has been bucked, with sales rocketing.

More EVs were sold in 2021 than in the previous five years combined.

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