Coronavirus: UK car production plummets to 36-year low

Saleha Riaz
·3 min read
The EU remained the UK’s biggest export destination, taking a 53.5% share, despite volumes falling 30.8% to 400,460 units. Photo: Getty Images
The EU remained the UK’s biggest export destination, taking a 53.5% share, despite volumes falling 30.8% to 400,460 units. Photo: Getty Images

UK car manufacturing output fell to its lowest since 1984 amid the economic fallout of the coronavirus pandemic, new data revealed.

Output fell 29.3% in 2020 2020 to 920,928 units, according to the latest figures issued by the Society of Motor Manufacturers and Traders (SMMT).

Mike Hawes, SMMT CEO, said, “These figures, the worst in a generation, reflect the devastating impact of the pandemic on UK automotive production, with COVID-19 lockdowns depressing demand, shuttering plants and threatening lives and livelihoods.”

Chart: SMMT
Chart: SMMT

December output was down 2.3% to 71,403, with some firms affected by border closures and component supply issues.

“This rounded off a dreadful year, the worst since 1984 for UK car makers, with the pandemic chiefly responsible for the decline,” the report said.

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Manufacturing operations were severely disrupted, with lockdowns and social distancing measures restricting factory output, Brexit uncertainty and depressed market demand in key export destinations, it added.

Production for overseas buyers fell 29.1% in the year, to 749,038 units, while output for the UK fell 30.4% to 171,890.

A bright spot was exports, which continued to drive UK car manufacturing, with more than eight in 10 of all cars made shipped overseas.

The EU remained the UK’s biggest export destination, taking a 53.5% share, despite volumes falling 30.8% to 400,460 units.

Chart: SMMT
Chart: SMMT

Exports to China ended the year up 2.3%, and those to South Korea and Taiwan also rose 3.6% and 16.7% respectively.

But trade with most of the UK’s other key export partners declined in line with tough market conditions resulting from the pandemic. Shipments to the US, Japan and Australia all fell.

The UK continued to rollout battery electric, plug-hybrid and hybrid vehicles to buyers at home and around the world.

Combined production of these models rose to 18.8% of all cars made in Britain, up from 14.8% a year before.

An independent outlook forecast car output to reach one million units in 2021, but much depends on COVID-19 recovery, market confidence and trading arrangements with the EU.

“The industry faces 2021 with more optimism, with a vaccine being rolled out and clarity on how we trade with Europe, which remains by far our biggest market,” said Hawes.

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“The immediate challenge is to adapt to the new conditions, to overcome the additional customs burdens and regain our global competitiveness while delivering zero emission transport. We will continue to work with Government to attract investment in battery production and supply chain transformation as we transition to smart and sustainable mobility, supporting jobs and driving economic growth nationwide,” he added.

The report said that while 2020 saw £3.23bn ($4.4bn) of automotive investment publicly announced for the UK, more commitments of this nature are essential for the future of a sector that is the country’s largest exporter of goods.

Prime minister Boris Johnson said the trade deal struck in late December would enable UK-EU trade without tariffs or quotas. But it has since emerged that tariffs, a tax on imports, remain a threat to trade as they can be imposed by either side in a wide range of scenarios.

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