Car output slumps as Brexit contingencies tighten

Brexit contingencies and a slowdown in demand from overseas markets has seen output from Britain’s car manufacturers slump by nearly half in April.

car output
(Image: Toyota)

Figures from the Society of Motor Manufacturers and Traders (SMMT) show that 70,971 cars were produced in April, down -44.5 per cent year-on-year as factory shutdowns, rescheduled to mitigate a March 29th Brexit, took effect.

According to SMMT, manufacturing for domestic and overseas markets fell -43.7 per cent and -44.7 per cent respectively as most volume manufacturers brought forward production stoppages usually scheduled for the summer holiday period.

Rescheduled shutdowns have formed part of ongoing contingencies – including stockpiling, training for new customs procedures and rerouting of logistics – designed to protect businesses when Britain leaves the customs union and single market.

Slowing demand in international markets – including the EU, China and the US – as well as at home have exacerbated April’s figures, which represent the 11th straight month of decline.

“Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation,” said Mike Hawes, SMMT chief executive.This is why ‘no deal’ must be taken off the table immediately and permanently, so industry can get back to the business of delivering for the economy and keeping the UK at the forefront of the global technology race.”

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SMMT said the situation could stabilise if Britain leaves the EU with a favourable deal and substantial transition period. Provided there is no escalation in global trade tensions, the decline in volumes will be helped further as new models come on stream and production lines remain active over the usual summer shutdown months.

Production Outlook, an independent forecast of UK vehicle manufacturing commissioned from AutoAnalysis, suggests that even with a favourable deal and transition period output will still be down -10.5 per cent on 2018 levels. A ‘no deal’ Brexit, however, could worsen this decline, with the threat of border delays and production stoppages.

Commenting on SMMT’s latest findings, Stuart Apperley, director and head of UK automotive at Lloyds Bank Commercial Banking, said: “On the face of it these figures make for stark reading, but things may not be as bleak as they first appear.

“A significant dip in output has always been on the cards for April as a result of the planned summer factory shutdowns being brought forward. With this in mind, we expect a clearer picture to emerge in the coming months when the impact of the shutdowns has worked its way through.

“There is no avoiding that the UK’s car industry remains particularly susceptible to any vulnerabilities the wider economy faces. It also has its own challenges – from record levels of stockpiling to falling confidence affecting demand on the continent, and China’s continued slump in sales.”

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