Vehicle production sinks to lowest level since 1953 as UK car factories suffer 'depressing' first half of year

Daily Mail​

4 days ago

Outputs of new cars and vans in Britain in the first half of the year have plunged to lowest levels on record since 1953, excluding the industry-shutdown period during Covid.
Production has fallen by 11.3 per cent year-on-year between the months of January and June because of multiple headwinds battering the automotive sector, figures shared by the Society of Motor Manufacturers and Traders (SMMT) show.
Car outputs are down from 416,000 units in the first half of 2024 to 385,800 in Q1 this year - a decline of 7.3 per cent.
The SMMT blamed the dip on uncertainty over export tariffs for the US - Britain's second most popular destination for UK-made motors shipped overseas - which saw some makers pause production during the opening six months of the year.
Jaguar ceasing outputs any cars in November for a 12-month 'sunset period' before relaunching as an electric-only brand in 2026 have taken their toll, as has Mini's decision to shift some vehicle outputs to China and Nissan preparing for production of two new EV models, the first being the all-new third-generation Leaf.
Commercial vehicle manufacturing has sunk comparatively lower by a massive 45 per cent. The trade body said this is mostly due to Stellantis' decision to shutter its Vauxhall Luton factory at the end of March.
Mike Hawes, SMMT chief executive, told a press briefing on Wednesday that the first half year figures are 'depressing' but hopes it marks 'the nadir' for the industry, while ministers have said the numbers are 'very concerning'.
Attempting to remain buoyant, the SMMT said significant advances for the sector have been announced in recent weeks that could help stop the auto manufacturing rot.
This includes the US-UK tariff deal, which was announced in early May but only came into effect on 30 June.
As such, the half-year results posted on Thursday are not reflective of the potential confidence the agreement with the United States could garner.
The data shows that UK car production is predominantly export-focused, with 77 per cent of output headed overseas.
While the EU is the most common destination (54 per cent of exports), the US is a major market for British-made motors, representing almost 16 per cent of all shipped vehicles.
Hawes also saluted the Government's reintroduction of subsidies towards the purchase of some new EVs, with Labour last week unveiled its Electric Car Grant for sub-£37,000 battery models.
Mini recently shifted production of its new electric Cooper to China as part of an agreement with Great Wall Motor that has ultimately lowered its UK outputs
The SMMT said this would be a 'boost' for the industry, though said the scheme - which includes thresholds around emissions produced during the manufacturing of cars ant their batteries to qualify for the grants - lacked clarity and had been announced without consultation with the industry.
Business Secretary Jonathan Reynolds' verdict on today's figures were more downbeat.
During an interview with BBC Breakfast, he said he is 'very concerned' about the industry, which he called the 'jewel in the crown' of British manufacturing.
'I'm very concerned about automotive, the pressures on the system which come from the US trade agenda, but also an incredible increase in capacity from China.
'It's why as a government we've adopted so many measures specifically around the automotive sector.'
Closer inspection of the latest data shows that commercial vehicle outputs in the UK crashed last month, with just 2,689 vans built in factories last month. This is down a monumental 77 per cent on the 11,600 output in June 2024.
However, passenger car production increased slightly during the previous month, up 6.6 per cent to just over 66,300 units.
The trade body said this was partially a result of growth linked to the US-UK trade agreement.
That said, the SMMT has remained modest about future outlooks.
It is not expecting vehicle production to exceed one million units per year by the end of the decade. The last time this was achieved was in 2021.
Speaking to journalists on Wednesday, Mr Hawes said that the government's own target of reaching 1.3 million vehicles per year by 2035 is 'quite some ambition from where we are', adding that 'we clearly require at least one, if not two, new entrants to come into UK production' to reach such an optimistic objective.
While outputs are generally down, the SMMT's data does show that British manufacturing is at least moving with the times.
Production of electrified vehicles - fully-electric, self-charging hybrid and plug-in hybrid vehicles - rose 1.8 per cent and now account for more than two in five motors made in Britain. This is a new record.
Transport Secretary Heidi Alexander will be hoping the reintroduction of grants of up to £3,750 towards the purchase of some EVs priced at or below £37,000 will help to drive outputs.
While the SMMT said it will provide a welcome boost to increase private EV sales, there remains widespread confusion about which vehicles will qualify for the discounts - and more importantly, those that won't.
Manufacturers are required to apply to be included in the grant scheme on a first-come, first-served basis.
It is expected that Chinese and Korean vehicles will not meet the criteria, but little else is clear regarding how the £650million funding will be shared.
'The difficulty is, we don't know. Nobody knows, but nobody, not even government, really knows yet, which models and which brands will qualify,' Mr Hawes said yesterday in comments quoted by the BBC.
'I think the industry is still trying to get clarity behind its application.
'Right now, your dealer cannot tell you whether the model you are considering is eligible.'
He said clarity was needed imminently with September on the horizon and the ninth month of the year being one of the two biggest for new car registrations due to the arrival of a new age identifier on number plates.
A number of Chinese brands - named MG, Leapmotor and Great Wall Motor Ora - have already introduced their own discounts in the last week to match those provided by the Government's grant scheme in a clear indication that they believe they will not qualify.
A transport department spokesperson said it expected 'dozens of models to be eligible for the electric car grant, which will provide a substantial boost for the industry and save drivers thousands of pounds'.
'We want the discounts to become available to drivers as soon as possible, and we are engaging extensively with vehicle manufacturers and have published guidance to help them apply as easily as possible,' they added.