Currently reading: Subs exclusive: UK car production falls by a fifth in Jan-June 2022

Some signs of shortages starting to ease, but a poor six months for JLR depresses UK's first-half numbers

Britain built almost a fifth fewer cars in the first half of this year compared with 2021 as car makers continue to suffer what industry lobby group the Society of Motor Manufacturers and Traders (SMMT) describes as the equivalent of long Covid, referring to the after-effects of the pandemic.

However, the figures did show a small uptick in June, suggesting the continuing semiconductor shortage might be easing slightly, the SMMT said.

The first-half production of 403,131 cars is 19% down on the same period last year. It was the weakest first half since the 2020 pandemic year and worse than 2009, when the UK was gripped by the effects of the global financial crisis.

The numbers were depressed by a turbulent first half of 2022 for Jaguar Land Rover, which vies with Nissan for the title of Britain’s largest car manufacturer by volume.

Jaguar Land Rover on Wednesday posted a loss of over half a billion pounds for the quarter ending in June. The Tata-owned company blamed the slower ramp-up in production for the new Range Rover and Range Rover Sport, both built in the company’s Solihull plant.

Meanwhile, production of the Jaguar XE and XF at the company’s Castle Bromwich facility has effectively stopped. Jaguar sold just 183 XE and 302 XFs globally outside of China in the three months to the end of June, company figures show. The company’s order backlog now stands at 200,000, suggesting a strong boost for UK manufacturing once supply shortages ease.

The poor figures also reflect the late-2021 shutdown of the Honda Swindon plant, and the stoppage of Vauxhall Astra production at the Ellesmere Port plant, which is being revamped to switch to production of small electric vans from Stellantis brands.

Nissan leaf on the production line at the nissan sunderland plant

A rise in output at Vauxhall’s Luton van plant meant production of commercials was the one bright spot, rising 47.5%. Van production for the first half was the highest in a decade, at just over 50,000 units, the SMMT said.

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The disruption faced by car makers in the first half included the war in Ukraine, which held up production of crucial wire harnesses, affecting Mini production in Cowley, Oxford, in particular.

The continuing problems forced the SMMT to downgrade its prediction for passenger car production in the UK in 2022 by over 10% to 866,000. That’s only slightly higher than 2021’s production figure of 850,575, which was the worst total since 1956.

The lobby group is now predicting UK car production won’t return past one million cars until 2025, instead of its forecast of 2023 at the beginning of the year. Eventually, production could exceed two million electric vehicles by 2040, given fair winds, SMMT head Mike Hawes told journalists on Wednesday.

“We do expect strong growth over the next few years, but so much depends on whether we can recover competitiveness and shift to electrification,” Hawes said.

Production of electric vehicles in the UK grew 6.5% to 32,282, led by the Nissan Leaf in Sunderland and Mini Cooper SE in Oxford. Nissan will replace the ageing Leaf in 2025 with a coupé-styled electric crossover that the company expects to build at a rate of 100,000 a year from its Sunderland plant.

The factory is also close to starting production of the hybrid e-Power version of the Qashqai SUV, its biggest-volume vehicle. The Sunderland plant is Britain’s largest by output, with 204,522 vehicles built in 2021. No half-year figures were supplied.

Car manufacturers are suffering from rising input costs, including an estimated combined bill increase of £90 million for energy in 2022, the SMMT has calculated. The lobby group is calling on the government to help bring down the sector’s energy costs, which, it says, are 59% higher than the average in the European Union.

Jaguar Land Rover, meanwhile, pointed to an inflation bill of £161 million for the quarter. Rising input costs include raw materials and manufacturing, it said.

So far, the reduction in manufacturing output can be solely laid at the door of shortage of supplies, especially chips, the SMMT said. That’s reflected in the stretching order bank that can leave customers waiting for up to a year, especially for higher-end models.

However, the rising costs could put their own dent in those production figures.

Chris Knight, UK automotive partner at the consultant arm of KPMG, said: “Manufacturers have limited ability to absorb additional cost and will pass this on to consumers in the form of higher prices.

“Consumers are willing to pay a premium for now, as demand for new cars still far outpaces supply. However, this willingness may decline if consumer confidence erodes.”

Whether June’s 5.6% increase on the same month last year is the start of a revival for Britain’s beleaguered car production remains to be seen, but the early signs of a return to a normal chip supply must give car makers hope that it also signifies an easing of the pricing inflation that threatens to push car buyers away at a crucial stage.

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