UK car output driven down by plunging demand in China

Honda production lineImage copyright

The number of cars made in the UK fell in January for the eighth month in a row, with much of the decline driven by plunging demand in China and the EU.

The Society of Motor Manufacturers and Traders (SMMT) said production overall fell by 18.2%, but output for destined for export was down by 21.4%.

Output for China was down by 72% while for the EU it was 20% lower, according to the industry body.

The SMMT’s boss said another month of decline was a “serious concern”.

Model changes, as companies phased out older vehicles, also played “significant part” in the production decline.

However, SMMT chief executive Mike Hawes added: “The industry faces myriad challenges, from falling demand in key markets, to escalating global trade tensions and the need to stay at the forefront of future technology.”

“But, the clear and present danger remains the threat of a ‘no deal’ Brexit, which is monopolising time and resources, undermining competitiveness,” he said.

The UK motor industry has been beset by a rush of bad news since the beginning of the year.

Last week, Honda announced the closure of its Swindon plant by 2021, with the loss of about 3,500 jobs. Jaguar Land Rover (JLR) and Nissan are also cutting production and jobs.

When JLR said last month that it would be cutting 4,500 jobs, most of them in the UK, it blamed the sales slowdown in China.

Last year, was a tough one for the car industry in China, the world’s biggest car market.

Just over 22 million new cars were sold last year. But that was a near 6% drop on 2017, the first fall in two decades.

An economic slowdown has made consumers more cautious about buying big ticket items.

In addition, Beijing has scrapped some tax breaks on new cars, and rising petrol prices have hurt sales of gas-guzzling sports utility vehicles.

‘Political uncertainty’

The declines in manufacturing output mean that in January UK factories turned out 120,649 vehicles, a fall of 26,858 units on the same time in 2018.

Most of the output, 93,781 units, was exported – a fall of more than a fifth on January last year.

Manufacturing for the domestic market fell by 4.8% as “political uncertainty continued to dent consumer confidence”, the SMMT said.

In a recent SMMT survey nearly one third of car companies said they had postponed or cancelled UK investment decisions because of Brexit. One-in-five respondents reported having lost business as result of Brexit.


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