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Chancellor should ‘stimulate market’ amid 16.8% UK car manufacturing decline

SMMT chief executive Mike Hawes

The Society of Motor Manufacturers and Traders (SMMT) has urged the Chancellor of the Exchequer to “stimulate the market” with his 2018 budget following September’s 16.8% decline in car production.

British car manufacturing declined 16.8% in September, with production volumes falling to 127,051 units as the number of vehicles built for UK and overseas markets fell by 19% and 16.2%, respectively.

In total, 25,610 fewer cars rolled off production lines last month than in the same month last year.

Year-to-date, UK car manufacturing plants’ overall output is now down 6.6% to 1,171,765 units, with eight-out-of-10 destined for export.

SMMT Chief Executive, Mike Hawes, said that the time was right for an annual budget which sends “the right signals" to car buyers.

Appealing the chancellor, Philip Hammond, Hawes said: “A stronger UK new car market would go a long way to boosting manufacturing output.

“The chancellor’s Budget next week is the perfect opportunity to stimulate the market, sending consumers and businesses the right signals to encourage the purchase of new cars, which would help bolster economic performance as well as delivering environmental goals."

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Hawes made no mention of the impact on manufacturing of the introduction of Worldwide Harmonised Light Vehicle Test Procedure and Real Driving Emissions vehicle testing standards which were introduced on September 1 in his statement on the decline in UK car production.

While Jato Dynamics highlighted the manufacturing impact of the changes to the fuel consumption and emissions tests in its market report, published yesterday, Hawes instead highlighted the de-stabilising effects of Brexit negotiations on the sector.

He said: “Today’s figures highlight the many competing challenges facing UK Automotive. It has been a turbulent year and the industry needs stability, something which appears elusive given the lack of resolution to Brexit negotiations.

“The UK government has recognised the importance of a deal that maintains free and frictionless trade with the EU, but it is up to all sides to deliver this to safeguard the hundreds of thousands of jobs depending on the sector.”

Justin Benson, head of automotive at KPMG UK, said that the domestic market was the main contributor to the reduction in production volume during September, adding that new models, such as expensive electric vehicles (EV) "aren’t helping the situation".

Benson said: "It would be a pleasant and very welcome surprise for carmakers next week if the chancellor announces an incentive for consumers to buy very low emission vehicles. 

“In the meantime, Brexit and continuing uncertainty is making consumers think twice about making major purchases and KPMG’s recent survey of the public in the event of a ‘no deal’ scenario found that almost half (47%) of the public expect to delay such purchases.

"While this means great offers on cars will continue, levels of consumer confidence are directly aligned to vehicle purchases. If there is certainty then confidence should increase, which will hopefully see an improvement in car production and sales.”

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