UK car production rises for third month in a row

UK car production rose for a third consecutive month, new figures have revealed, despite many potential buyers “applying the brakes to their spending plans”.

The data, released today by the Society of Motor Manufacturers and Traders (SMMT), shows that the country recorded a 8.6% year-on-year rise in July to a total of 58,043 cars.

However, these figures were significantly below pre-pandemic levels. The UK produced 108,239 cars in July 2019 – almost double the number recorded this year.

Moreover, the 4605-unit improvement compared with July 2021 must be qualified with the fact that it was the worst July for car production since 1956, the SMMT said, when the Suez Crisis spiked fuel prices (forcing petrol rationing) and dampened demand for cars.

Exports to the EU and US were down by 7.3% and 22.3% respectively in July to 22,842 and 7615 cars. Meanwhile, orders from Asia increased by 54.0% from China and 40.1% from Japan, to 4701 and 1950 cars apiece.

Exports are critical to the UK’s car industry, the SMMT said, with 78.8% of cars built here since January shipped overseas, 59.3% to the EU.

So far in 2022, 461,174 cars have been produced in the UK, which is 16.5% fewer than in the same period last year.

The SMMT attributed the production shortfall to “supply chain shortages, structural changes and weak exports”, and chief executive Mike Hawes added energy costs – “rising at alarming rates” – to the list.

Hawes added: "If we are to attract much needed investment to drive the production of zero emission vehicles, urgent action is needed to mitigate these costs to make the UK more competitive for manufacturing."

Richard Peberdy, UK head of automotive at KPMG, agreed with the SMMT’s reasons for the decline, saying: “Rising energy, supply and labour costs are driving up the cost of car production at a time when many consumers are applying the brakes to their spending plans.”

Some 363,223 cars were produced for export, down 21.5% on the 461,356 recorded at the same point in 2021. Meanwhile, production for the UK market increased by 7.6% to 97,951.

Nonetheless, production of battery-electric cars surged by 65.9%, likely driven by buyers seeking cheaper-to-run vehicles, as well as increased demand from company fleets.

In fact, 29.9% of all cars produced in the UK in July 2022 were hybrid, plug-in hybrid or fully electric, amounting to a total of 17,356.