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Brexit shutdowns trigger 44.5% car production decline

Mike Hawes, SMMT

UK car manufacturing output declined by 44.5% in April as a result of factory shutdowns scheduled by manufacturers in anticipation of import difficulties resulting from a March 29 Brexit.

The Society of Motor Manufacturers and Traders (SMMT) reported today (May 30) that 56,999 fewer units built in extraordinary month after Honda Swindon, Mini Oxford and Toyota Burnaston all temporarily shut their doors last month.

In total, 70,971 cars rolled off production lines last month, resulting in a 22.4% year-to-date decline in productivity for the sector as 127,240 fewer cars were built than during the same period in 2018.

SMMT chief executive, Mike Hawes, said: “Today’s figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers.

“Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation.

“This is why ‘no deal’ must be taken off the table immediately and permanently, so industry can get back to the business of delivering for the economy and keeping the UK at the forefront of the global technology race.”

Manufacturing for home and overseas markets down, by 43.7% and 44.7% respectively as the UK car manufacturing sector suffered its 11th consecutive month of decline during April.

The SMMT said that manufacturer’s shifting of shutdowns usually scheduled for the summer months “cannot now be repeated for a October 32 Brexit deadline”, however.

It said that the measure – part of a raft of costly and ongoing contingency measures, including stockpiling, rationalisation, training for new customs procedures and rerouting of logistics – had all designed to try to protect business when the UK leaves the customs union and single market.

The SMMT said: “Provided the UK leaves the EU with a favourable deal and substantial transition period, and notwithstanding any escalation of global trade tensions, the decline in volumes is expected to ease by the end of the year, as new models come on stream and production lines remain active over the usual summer shutdown months.

“However, the latest independent outlook suggests output will still be down some 10.5% on 2018 levels.

“A ‘no deal’ Brexit, however, could exacerbate this decline, with the threat of border delays, production stoppages and additional costs compromising competitiveness.”

Commenting on today's UK vehicle production data from the SMMT, KPMG UK's head of automotive, Justin Benson, said: “April’s car production figures, which highlight a steep fall, are alarming for the automotive industry.

"The Brexit limbo needs to stop, as the sector requires certainty and clarity about the kind of Brexit deal that will be implemented.

"Whilst a significant fall in production was expected and planned for - in anticipation of the UK’s potential departure from the EU on 29 March - these sorts of figures cannot be repeated in October without serious implications for the sector’s output.

“The key concern is the effect on Britain’s competitiveness and reputation, considering around 80% of cars produced in the UK are exported.

"We are already seeing German and other EU countries moving their orders for manufactured goods from the UK to companies in other EU countries in readiness for Brexit, so damage is already being done.

"I can’t stress enough that the automotive industry needs stability, and it needs it now.”

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