Weak demand in Europe sees UK car production slump by 8% in May
UK car manufacturing fell by 8.4% in May as the industry was impacted by continuing weakened demand across the Eurozone.
Nevertheless, sector analysts have said the industry is still out-performing pre-recession levels and demand in the home market continues to grow.
In total, 129,355 vehicles were manufactured last month and for the year-to-date, while volumes have remained flat during the first five months of 2013, the overall total of 632,804 is down just 0.6% on last year.
Export volumes fell 12.3% and are down 6% for the year-to-date. Nevertheless, 81.4% of all the vehicles made last month were destined for overseas markets.
Mike Baunton, interim chief executive of the Society of Motor Manufacturers and Traders said: “Despite output falling this month due to weak European demand, UK car manufacturing in May was above 2007 levels.
“Production levels are holding firm for the year so far, testament to the appeal of UK-built products around the world and significant growth in volumes built for the home market. While economic challenges abroad will impact on car output in the short-term, high-value investment by global automotive companies sets UK industry on course for prosperity in the long-term.”
The picture was less rosy for the commercial vehicle sector where production fell 20% in May to 7,560 units. Engine production was also impacted by the declining demand in Europe, with volumes down 8.2% last month.
John Leech, Birmingham-based UK Head of Automotive at KPMG, said the volume sector was likely to be hit hard by the situation in Europe but the situation was more positive for premium manufacturers such as Jaguar Land Rover because of strong demand in new markets.
“New car sales in Europe hit a 20-year low in May as unemployment hit a record 12% averaged across the Eurozone countries. It is clear that new car sales in Europe will shrink for the sixth successive year and carmakers are split on whether there will be any recovery this year,” he said
“The industry continues to lobby Governments across Europe for some form of stimulus package, but UK volume car plants such as Nissan, Toyota and Honda are already cutting production and are planning longer August shutdowns this year.
“The situation for our premium carmakers is different since they export to emerging markets, and this, together with the strong demand for cars from UK consumers, means that I still forecast UK car production will grow again in 2013. This will make it the fourth consecutive year of growth, contrasting sharply with the rest of Europe, which is expecting its sixth straight year of decline. Our medium-term forecast also remains positive, with UK vehicle production set to grow from about 1.5m to 1.9m in 2016 based on manufacturers’ latest plans.”
