Global instability compounded by fears of a ‘no deal’ Brexit have contributed to a 20.1% decline in vehicle production in the UK during the first half of 2019, the SMMT has said.
The Society of Motor Manufacturers and Traders revealed today (July 30) that British car manufacturing output fell by more than a fifth in the first half of 2019, with a 15.2% dip in June marking the 13th consecutive month of decline.
A total of 666,521 cars rolled off production lines in the first six months of the year, a loss of 168,052 units of production so far.
Downturns at home and in key global markets saw YTD production for the UK fall 16.4% and 21% for export, with April’s extraordinary Brexit shutdowns adding to losses, the SMMT said.
Mike Hawes, SMMT chief executive, said: “Today’s figures are the result of global instability compounded by ongoing fear of ‘no deal’.
“This fear is causing investment to stall, as hundreds of millions of pounds are diverted to Brexit cliff-edge mitigation – money that would be better spent tackling technological and environmental challenges.”
The SMMT claimed that at least £330 million has already been spent by the automotive manufacturing sector on contingency plans for a ‘no deal’ Brexit.
As PSA Group warned that it could move production of the next generation Astra hatchback away from Ellesmere Port if the UK's Brexit deal made the site unprofitable, most major UK manufacturers have tied up working capital stockpiling materials and components, securing warehousing capacity and investing in new logistics solutions, additional insurance and training in new customs procedures, it said.
Meanwhile, the SMMT’s latest figures show inward investment into the manufacturing sector effectively stopped in H1.
Between January and June newly pledged investment was down more than 70% to £90 million, contrasting with the average annual investment figure of £2.7 billion over the previous seven years.
The SMMT said: “While the welcome announcement by Jaguar Land Rover (JLR) earlier this month was exceptional good news, this is something of an outlier as the vast majority of manufacturers have suspended plant and product spending in the UK amid ongoing uncertainty.”
Automotive manufacturing delivers £18.6 billion to the UK’s economy each year, employing 168,000 people in jobs with an average salary some 40% higher than the national average, according to SMMT data.
The sector is also considered one of the UK’s most productive, with automotive output per job now worth some £100,900.
Automotive remains the UK’s single biggest exporter of goods, trading with some 160 countries worldwide and accounting for more than 14% of total exports.
Hawes said: “The industry’s foundations are fundamentally strong and we’re ready to work with the new government to build on these through the industrial strategy.
“We need an internationally competitive business environment to encourage more investment, more innovation and more growth.
“That starts with an ambitious Brexit deal that maintains frictionless trade and we look to the new administration to get a deal done quickly so manufacturers can get back to the business of building cars and helping deliver a brighter future for Britain.”