Further slump for British car industry ‘a serious concern’

The British car industry has witnessed its worst period of decline since 2001 as ongoing weakness in major EU and Asian markets hit exports.

UK car production was down more than 10% year on year in July and has now fallen for 14 consecutive months, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

British car manufacturing output declined -10.6% in July, with 108,239 units produced as some key model changes affected performance.

Production for export fell -14.6% in the month, although overseas demand remained the main driver of overall volumes, accounting for 8 in 10 cars built.

Meanwhile, output for the domestic market rose by 10.2%, or just fewer than 2,000 units, following a steep -35.1% fall in July last year, when multiple factors, including preparation for WLTP affected output.

In the year-to-date, some 774,760 cars have been made in Britain, 180,864 fewer than in the same timeframe last year and representing a fall of -18.9%.

With exports accounting for the vast majority of orders, their decline is primarily responsible for the overall fall in output with overseas shipments down -20.2% since January, while year-on-year production for the UK is down -13.5%.

Mike Hawes, SMMT chief executive, said: “Another month of decline for UK car manufacturing is a serious concern. The sector is overwhelmingly reliant on exports and the global headwinds are strong, with escalating trade tensions, softening demand and significant technological change.

“With the UK market also weak, the importance of maintaining the UK’s global competitiveness has never been more important so we need a Brexit deal – and quickly – to unlock investment and safeguard the long term future of a sector which has recently been such an international success story.”

The news comes as the potential for a no-deal Brexit becomes increasingly likely following the prime minister’s decision to prorogue parliament for five weeks, making it harder for MPs to block a no-deal Brexit.

A no-deal could mean that parts and finished vehicles could be delayed at the border by new checks while carmakers fear tariffs as might rise as high as 10%.