UK car production slumps to lowest October output since 1956

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Production of new cars in the UK fell fell by an annual 41.4 per cent last month to its lowest October level in 65 years as the global lack of semiconductor chips and a plant closure hit the sector, according to the latest report from the trade industry body.

A total of 64,729 cars rolled off British production lines, data from the Society of Motor Manufacturers and Traders (SMMT) showed on Friday.

The fall reflected the global supply chain problems and Honda’s permanent closure of its factory in late July and is the lowest October UK output since 1956.

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UK car production slumps to 65-year low: A total of 64,729 cars rolled off British production lines last month - the lowest in October since 1956, record show

UK car production slumps to 65-year low: A total of 64,729 cars rolled off British production lines last month – the lowest in October since 1956, record show

A shortage of semiconductor chips means car makers are unable to produce enough cars to meet the massive demand from consumers - which in turn is causing huge delivery delay times

A shortage of semiconductor chips means car makers are unable to produce enough cars to meet the massive demand from consumers – which in turn is causing huge delivery delay times

Car output in the first 10 months of the year stood at 721,505 vehicles, down 2.9 per cent on 2020 when sites were closed for months as the coronavirus pandemic hit Britain.

Full-year car and van output will be below one million for a second consecutive year but is expected to return to above that level in 2022, the SMMT said, citing an independent forecast by AutoAnalysis.

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While total outputs were down, production of electrified cars remained healthy.

Battery electric vehicles (BEVs), plug-in hybrids (PHEV) and hybrids (HEV) made up almost one in three (30 per cent) vehicles that came off UK assembly lines in October.

The month saw zero-emission model outputs surpass 50,000 for 2021 – more than the 43,790 pure-electric vehicles produced pre-pandemic in the full year of 2019, as manufacturing of EVs rose by 17.5 per cent to 8,454 units.

While total outputs were down, production of electrified cars - like Mini's Electric built in Oxford - remained healthy

While total outputs were down, production of electrified cars – like Mini’s Electric built in Oxford – remained healthy

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Commenting on the manufacturing figures released this morning, SMMT chief executive Mike Hawes described the figures as ‘extremely worrying’ and said they ‘show how badly the global semiconductor shortage is hitting UK car manufacturers and their suppliers’.

‘Britain’s automotive sector is resilient, but with Covid resurgent across some of our largest markets and global supply chains stretched and even breaking, the immediate challenges in keeping the industry operational are immense,’ he added. 

Richard Peberdy, UK head of automotive at KPMG, said the short supply of semiconductor chips means carmakers are ‘having to prioritise models and markets’ and warned that this is likely to continue into 2022.

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‘Increasing inflationary pressures only add to this challenging picture, leading to revised forecasts,’ he explained.

‘But whilst there are fewer cars leaving the factory, those that do are selling, quickly, and with less discounting than historically required.

‘Demand continues to outpace supply, and by the time these supply chain issues ease there will likely be a lot of pent-up demand to be met on forecourts.

‘But for now that will still feel a long way off for a number of carmakers.’

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Motor bosses called on the Government to provide more support to the sector, which is one of the largest industries in the country employing more than 790,000 people

Motor bosses called on the Government to provide more support to the sector, which is one of the largest industries in the country employing more than 790,000 people

The SMMT used the results to again call on the Government to support the industry with measures to raise competitiveness with global rivals, in ‘tackling high energy costs, supporting employment and training and helping businesses whose cashflow is under pressure from these historically poor production numbers’. 

Jim Holder, editorial director at What Car?, echoed the calls for additional support for the sector as it supply shortages continue to strangle its recovery from last year’s pandemic-hit outputs.

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‘The UK automotive sector is one of the largest industries in the country, with a £60.2 billion turnover and employing more than 790,000 people,’ Holder said. 

‘Adding up to £11.9 billion to the UK’s economy each year, the sector is in a crisis and needs support from the Government to thrive again.

‘Estimates suggest the microchip shortage will continue well into 2022, and the industry cannot sustain similar performances like today’s in the long run. 

‘Support will be needed, from helping invest in new plants for electric vehicles, to improving business rates and energy prices, as well as reducing trade costs against competitors elsewhere. As the UK transitions towards electric vehicles, this support is more crucial than ever.’

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Van production INCREASES in October 

While passenger car manufacturing in the UK fell to a 65-year low, production of vans and commercial vehicles increased by 17.2 per cent.

Some 7,892 units were built in October, according to the SMMT, and is the highest monthly uplift since June this year.

It follows a weak October 2020 where operators delayed fleet renewal due to issues relating to the pandemic and uncertainty over a no-deal Brexit.

Increases output was driven by domestic demand, which grew by 29.8 per cent, while the number of vans built for export also increased, but by a more modest 6.8 per cent.  

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So far in 2021, some 58,813 commercial vehicles have been produced in Britain – an increase of 15.6 per cent against a Covid hit 2020. 

However, when compared to the five-year pre-coronavirus average, output remains 18 per cent down, with ‘pingdemic’ staff shortages earlier in the year and the ongoing impact of the semiconductor shortage restricting production.

Mr Hawes said: ‘Significant growth in CV production during October comes as welcome news, but it must be viewed in context against a weak month in 2020. 

‘The sector is not immune from the ongoing challenges caused by the pandemic and, most notably, the semiconductor shortage and there remains plenty of uncertainty in the months ahead. 

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‘UK manufacturers are committed to doing all they can to keep production lines operational, getting more of the latest, cleanest CVs onto our roads, and boosting fleet renewal which will go a long way to improving air quality in urban areas.’ 

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