The Society of Motor Manufacturers and Traders (SMMT) has called on the government to urgently help the sector and keep it globally competitive, as latest figures reveal the country is producing nearly half the number of cars it was before the Covid pandemic.
Despite a fourth consecutive month of growth in August, and a 39% (12,655-unit) uptick in car production on the same point last year, UK car production was down 42,257 units (45.9%) in August compared with August 2019, according to figures released today by the SMMT, the UK's leading trade body.
The UK also produced 13.3% fewer cars over the first eight months of this year (511,106) than it did from January to August in 2021 (589,607). This was driven by a drop in exports from 490,556 last year to 402,434 this year, whereas production of cars for UK consumption was up 9.7 % from 99,051 to 108,672.
The SMMT said this coupled with rising energy costs, which have risen by more than £100 million sector-wide so far this year, could hinder car producers further, leaving them at a disadvantage against European and global rivals. The rising prices of raw materials, semiconductors and logistics are also major issues within the industry.
Business tax reliefs announced recently in the ‘mini budget’ of the UK goverment under prime minister Liz Truss will end in the spring and the SMMT said they need to be backed by further long-term action.
Reform of business rates, enhanced capital allowances, an affordable and secure supply of low-carbon energy and investment in new skills are being called for and SMMT chief executive Mike Hawes claimed this could “enable this critical sector to deliver the economic growth, productivity improvements, balance of trade benefits and job security the UK sorely needs”.
He added: “While another month of rising UK car production is good news, and testament to sectoral efforts to overcome supply chain shortages, it overshadows what is an extremely tough and uncertain environment for manufacturers. Volumes are down dramatically and firms are having to take drastic steps to safeguard their businesses in the face of myriad challenges.”
These drastic steps include extensive energy-saving measures and absorbing price increases to keep their products competitive, although some are now having to pass these on to customers.
The SMMT said the knock-on effect for many (which includes 41% of its members) is that they have been forced to delay or cancel investments, with 13% reducing shifts and 9% resorting to cutting jobs.
The government has already confirmed that further tax reliefs for businesses are in the pipeline with a “medium-term fiscal plan” coming in November, followed by a full budget in the spring. But despite calls from many within the business sector, chancellor Kwasi Kwarteng has refused to provide any further details.
Add your comment