News : UK car manufacturing continues to fall

Carole Nash Classic Insurance Specialists

UK car production is in decline, and has been for seven straight months in a row. It’s down by 4.4% in February, as production for the home market fell by double figures, according to data published by the Society of Motor Manufacturers and Traders (SMMT). Moreover, exports from UK car factories have also declined.

The SMMT reports that UK exports have declined less seriously than overall production. UK exports are down by 0.8%, with 117,139 vehicles shipped overseas in February. This number accounts for more than 80% of UK car output, and clearly shows how dependent the economy is on exchange rates and potential import tariffs.

Demand at home is where the biggest drops are. February production for the UK fell by 17.0% to 28,336 units, with 145,475 units produced compared with 152,232 for the same period in 2017. Year-to-date production is down 2.3%, while domestic demand in 2018 so far has fallen away to the tune of 11.9%.

UK abandons 2020 targets in slowing economy

According to a report in The Guardian, the UK car industry has abandoned its target to build more than two million cars a year by 2020. That would have been a record for the UK, overtaking the previous best of 1.92m in 1972. Weak UK sales are contributing most to the slowdown – and that’s down to a number of issues, not just Brexit uncertainties.

Currently, around 80% of UK cars are sold abroad, with the largest trading area for the UK car industry being the EU. In 2017, exports fell 1.1% to 1.33 million. That’s in stark contrast to the number of UK cars sold domestically, which fell 9.8% to 336,628. Andy Barratt, Chairman and Managing Director of Ford in the UK, said the Government is listening to the British car industry. ‘We have an active voice. Industry has been very clear and consistent about what it needs.’

In contrast, Jaguar Land Rover, Britain’s biggest carmaker, said in January that it would reduce the number of cars made at Halewood, blaming faltering sales after the Brexit vote and a tax crackdown on diesel vehicles – and the vast majority of JLR’s products are diesel powered.

Toyota will continue to invest in the UK

Toyota’s European Chairman previously warned of a fog around negotiations over Britain leaving the EU, and that this issue had the potential to stall its investment here. Didier Leroy said: ‘Today they export 80-85% of production to Europe, so if we move to something like an import tax, trade tax or any kind of additional penalty, it will create a big negative impact in terms of competitiveness for this plant.’

However, at the Geneva Motor Show in March 2018, Toyota announced that the next-generation Auris (below) would be built in the UK, and that the Burnaston plant would be overhauled to build the car, which is based on the Toyota New Generation Architecture (TNGA). This represents a £250m investment, and also opens up the opportunity to build other models alongside the new hatchback.

Mike Hawes, SMMT Chief Executive, commented on February 2018’s figures by saying, ‘Another month of double digit decline in production for the UK is of considerable concern, but we hope that the degree of certainty provided by last week’s Brexit transition agreement will help stimulate business and consumer confidence over the coming months. These figures also highlight the scale of our sector’s dependency on exports, so a final deal that keeps our frictionless trade links with our biggest market, the EU, after December 2020 is now a pressing priority.’

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

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  1. I think that things are going to get a lot worse,Toyota have announced that the Avenesis is not to be replaced Mini are building more cars at Ned Car in Holland & Steyr Magma are building the Jaguar E-Pace as well. I convinced that after the UK leaves the EU that car manufacturers will not be willing to risk the fluctuations of the pound and euro coupled with the uncertainty of import duties incurred by both finished cars and components into the EU that will nullify any productive gains by manufacturing in the UK. Both Nissan & Toyota have plants scattered over the EU and I could easily envisage most production being transferred there. Honda is slightly different but it has other plants in Mexico & the US that could be used. I don’t fancy the chances Vauxhall/Opel Elsmere Port plant much either after all when PSA took over Chrysler Europe the Linwood plant closed within a few years and Ryton closed in the first decade of this century. Sorry to seem so pessimistic but I can’t honestly see much of a future for vehicle manufacturing in Blighty and I wouldn’t be surprised if in a couple of decades apart from a few specialist manufacturers that there won’t be much going on here at all.

    • Nobody buys the Avensis anyway. The E-Pace is built at Steyr as JLR didn’t have any UK capacity. As it happens, Halewood production has slightly slipped as the Evoque declines as it nears its replacement, but that replacement should boost sales. Cowley is full, that’s why BMW use Nedcar.

      UK car sales were artificially high for many years due to the incredible finance deals which boosted sales despite the slowdown in household income, at some points sales had to slow, even without Brexit. Then you have the diesel fiasco which adds uncertainty. Finally, Ellesmere port suffers slightly through producing the wrong model now. I don’t trust PSA and their intentions for the UK, especially they closed down Ryton in the mid 2000s when we were run by the EU friendly Tony Blair…

  2. Maybe we are building the wrong kind of vehicle in the UK, do people want perfectly good Astras from Ellesmere Port or Jaguar saloons from Halewood or even dependable Hondas from Swindon? Our car buying tastes are changing and going into chaos with all the choice of multi purpose vehicles and suspicion of diesel. Meanwhile there doesn’t seem to be the appetite to turn things round with active lobbying to build a SUV or get Kia to build a factory on Teesside or South Wales. Thank you Nissan for exporting all those Leafs to Norway and making cars people want! And Toyota too!

  3. With Britain’s economy seemingly being about ‘services’ and financial speculation and with the uncertainties introduced by the falsely marketed Brexit, this is hardly surprising news. Of course the effect will be seen in British job losses rather than lost British profits as most motor manufacturing is overseas owned.
    It is sad that Britain can’t run an economy that allows the long term planning required for the jobs provided by ownership of large scale industrial manufacturing. Isn’t it more than a little ridiculous that in an economy the size of Britain’s, that the largest British owned manufacturer is now Morgan,( and they’re doing very well, with no exposure to machinations of the sharemarket and City moneymen).

  4. The main problem is, over 40 per cent of cars produced in Britain in recent years have been diesels. Now diesels have been shown as bad for the environment and are to be banned eventually, and manufacturers are switching to hybrid and electric cars, there’s bound to be a slowdown as factories switch over to the new technologies. Sad thing is most Land Rover production has been of diesel cars, and a changeover will be expensive and could hit production.
    Another thing, I’d be wary of Peugeot’s intentions with Ellesmere Port and the Vauxhall badge in general as they could see it as another Linwood, an isolated factory producing one model, and close it and rebadge Vauxhalls as Opels. In the great scheme of things, I can see Opel being used as a downmarket brand, with production moved to Spain and Eastern Europe.

  5. PCPs! Won’t someone mention PCPs! They’ve given a really artificial boost to new car sales over the past few years, as people who’ve never considered buying new, suddenly did for the first time.

    But renewal time comes, and suddenly they realise that they can’t get an equivalent new car for the same money, so do they downsize, or stick with what they’ve got? What will the neighbours think when the A3 becomes a Polo… There was a feature on BBC’s Moneybox about it – you have to spend quite a lot more now to replace a premium car with the same model.

  6. @ Rob, One of my friends has bought a new Kia Rio on a PCP. He used his Peugeot 207 as a deposit, and pays £ 200 a month with free servicing for 3 years. When the 3 years ends, he has the option of handing the car back, or paying £ 4000 to keep it. It’s a no brainer as under the old system, such a car would be too expensive for him.

  7. I agree with Glenn’s concerns about the PSA ownership of Vauxhall & Opel, though recent Vauxhall advertising has pushed the tagline “British brand since 1903”. I too fear that the Opel name will replace Vauxhall. Hard for me to come to terms with as GM owned Vauxhall for just about all my life.

    • I have a fear that Vauxhall or Opel could become like a Talbot type brand, producing cars with aged technology built to a price and probably made in Eastern Europe to keep costs down. This would be a big slap in the face to Opel in particular who were known in the past for making some desirable cars like the Senator and the Monza, but there again Talbot was originally known as an upmarket brand before the 1979 revival.
      Mind you, Peugeot and Citroen, away from the DS brand, aren’t doing too well and Citroens now seem completely bland and forgettable, while the only Peugeots I see locally in big numbers are the 108 and 3008 people carrier. Perhaps some large scale rationalisation could happen here as well, with Peugeot maybe becoming a premium brand like it once was and Citroen reduced to making superminis.

    • To me honest I’m not especially bothered by the Vauxhall “brand”, keeping their UK factories is far more important. A Crossland X is a dull Spanish made crossover on a PSA platform, whether badged Vauxhall or Opel, while the Grandland X crossover is even made in a French PSA factory.

      • That’s what I expected maestrowolf. Sadly, the days of totally British designed & built Vauxhall’s has passed. The Victor/VX FE series were the last of the breed. I expect all future Vauxhall’s & Opel’s to be engineered and badged in this way.

  8. Could be right Glenn. As you say, the Opel Senator & Monza / Vauxhall Royale’s were nice looking big cars… badged as Vauxhall of course. I do hope the Vauxhall brand & badge will continue, it was my Dad’s first car back in the early 60s

  9. PPI compensation was putting a lot of money into people’s pockets and that has now dried up. This and the clampdown on PCPs means there will be a hiatus until all those new cars wear out and need replacing. This has always been a highly cyclical industry and the good news is that, so far, foreign sales are holding up, and this is 8-% of production, so the fall can only go so far. Personally, I don’t think Brexit has anything to do with it. The plain fact is the money is just not flowing like it was; all good things come to an end as Grannie used to say, and any manufacturer thinking sales will always carry on at a very high level is being foolish IMHO

  10. Well its what they voted for and just as things seemed to be going so well. If there is one thing the British are absolutely brilliant at, its shooting themselves in the foot driven by bitterness, spite, delusions of grandeur on a grand scale and a complete detachment from reality.

  11. Fraser Mitchell’s analysis seems to be highly pertinent . There comes a point in the cycle where the market is saturated, and that can be exacerbated by additional factors such as uncertainty over future propulsion methods

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