UK car production stalls as domestic market hit by ‘perfect storm’

The number of cars made in the UK fell last month after domestic demand plunged due to what the industry body called a “perfect storm of events”.

Production fell 5.5 per cent in June – driven by a 47.2 per cent drop in production for the UK market, according to the Society of Motor Manufacturers and Traders (SMMT).

The SMMT blamed preparation for new emissions tests and new car models for what it said was a “one-month anomaly”.

Longer term, UK car production was as expected, the industry body said.

SMMT chief executive Mike Hawes said June’s figures “demonstrate the risks of judging automotive performance one month in isolation, with numerous and varied factors creating a perfect storm for home market output”.

More than eight out of ten cars made in Britain are exported and the SMMT said that this had continued to drive production with overseas orders helping to “bolster disappointing domestic demand”.

It said overseas orders were “broadly stable” in the first half of this year, meaning car production was down just 3.3% for the first half of the year.

But Mr Hawes said the reliance of the UK market on exports demonstrated the importance of the industry’s “dependency on free and frictionless trade”.

He said any disruption to this due to Brexit “risks undermining” this.

The SMMT said last month that investment in the industry had fallen by half with Brexit uncertainty “thwarting” decisions by major car companies to put more money into UK factories.

But Mr Hawes said that the UK’s government’s latest Brexit proposals were “a step in the right direction to safeguard future growth, jobs and consumer choice”.

Commenting on the news, Alex Buttle, director of car buying comparison website said: “With things as they are, the Government has the power to push the UK automotive industry over the edge.

“The importance of the car industry to the UK economy should not be underestimated, yet with continuing inaction at the top of Government, it could be decimated.

“Record new car sale turnover in 2017 feels like a distant memory at the forecourt. This year, new car sales have been dismal and are on a downward trajectory.

“There is no starker picture of the impact on UK businesses of Brexit confusion than what’s happening to the car industry, which is hurting badly and in need of a massive confidence boost.

“Sadly, the PM’s pledge to try and and agree a “customs arrangement” is unlikely to provide that boost and alleviate the confusion.

“The automotive industry has made it clear that for its long term health it wants the UK to commit to continued membership of the customs union and access to the single market.

“But if that deal is not on the table, then we need to know pretty swiftly what deal we are looking at.

“Theresa May is in a race against time otherwise she could be presiding over the slow demise of one of the UK’s greatest industries.”