British car production declined by 18.2% in the first month of 2019, sparked by a significant fall in demand from China and Europe.
According to figures from the Society of Motor Manufacturers and Traders (SMMT), Britain produced 120,649 cars in January, 26,858 fewer than in the same month of 2018. It is the eighth consecutive month in which production has declined in the UK.
While the number of cars manufactured for the domestic market fell by 4.8%, the bulk of the decline came from the export market, which fell by 21.4%. Demand for British-built cars in China declined by 72.3%, with exports to the 27 other European Union member states down 20%.
The news is another blow for the UK car industry, following Jaguar Land Rover’s recent losses – which it attributed in part to its struggles in China – and Honda’s recent decision to close its Swindon factory.
SMMT boss Mike Hawes said that the industry faces “myriad challenges”, including falling demand and the threat of a trade war. But he added the “clear and present danger” remains the continued risk of a no-deal Brexit. He said preparing for that prospect was “monopolising time and resources, undermining competitiveness”.
He added: “Every day a no-deal Brexit remains a possibility is another day automotive companies pay the price in additional and potentially pointless costs.”
Read more
Ex-Honda UK boss on why Swindon plant is shutting
UK car manufacturing falls 9% as investment plummets in 2018
Jaguar Land Rover posts £3.4 billion loss in final quarter of 2018
Join the debate
Add your comment
Points.
1. Rubbish, For the most part there's no way EVERY car part that is imported using the current 'just in time' method can be stockpiled for potential shortfalls. Just how many tyres can Ellesmere port store?
2. I'll give you that
3. Lower exchange rate helps exports. As to Europe as a whole, it's all suffering regardless cor countless reasons
1 There is more than just
1 There is more than just into UK production involved, there are parts made in the UK that are exported to Europe where Raw materials are imported. I can assure you it is happening I can see it. Also parts are being moved into EU ahead of Brexit to smooth the issue. And there are UK factories arranging shut downs to coincide with the expected issue. The UK automotive industry is more than just car makers. It is happening.
3. If hard Brexit and WTO applies then tarriffs apply. Depending on the Brexit type and product nature the impact varies. At the moment you have to assume Hard Brexit and the worst case WTO. Exchange rates are a mixed blessing. The UK is low in raw materials so we import a lot and due to our policy of exporting manufacture we tend to have high tech type assembly where wages are low and there is a lot of investment. Result the UK spend is largely wages and is under 20% of sales price for example ( a generalisation but its handy). WTO adds say 10% on top of your price, raw materials tend to track your selling price not the £. Result your profit margin gets eroded or wiped out and your employees are worse off because their currency has fallen. To balance a 10% tarriff you wages need to fall a long way in the foreign currency terms.
If your business is high in UK spend then I agree a lower currency pushes up the value in £, but if it is not then it is bad news. The impact will vary market to market, erson to person and country by country. But remember every version of Brexit that the UK Brexit pushing government goes for is show to have an overall negative impact on the country.
As if by Magic
Here is a worked example of the Cash flow issue from a UK company.https://www.theguardian.com/business/2019/feb/28/aston-martin-sets-aside-30m-for-brexit-as-revenues-rise
As I said there are problems not Brexit related but it cannot be said it is not making life harder. The important bits. Note they are holding contingency stock.
The company said it was setting aside the cash in readiness for no deal or a disorderly Brexit, including £2m for revised supply chain routes. It has hired a new supply chain chief and has made plans to fly in components or bring them in through naval ports.
Andy Palmer, the chief executive, said a delay to Brexit would be a “further annoyance”. MPs could potentially vote on whether to delay Brexit on 14 March, a fortnight before the scheduled departure date of 29 March. Palmer added: “You’re holding that contingency stock for longer, which means that your working capital is tied up for longer. More importantly, what you’re doing is you’re creating continued uncertainty.”
Strawmn_John
It's the uncertainty over Brexit that is causing some problems and may well be holding back house price growth, though it's up 0.4% from January's 0.1%. And that is COMPLETELY at the door of MPs (as we should have left by now!). Look at your own quotes. Any Brexit delay will further add some issues. I don't think anyone's arguing about that. But 'Brexit' isn't doing anything to car sales, only the DELAY of Brexit. If we end up getting a deal, then Brexit will not be affecting car sales at all - in any way. If we don't get a deal then Brexit may well affect all sorts of things...but we will recover. But as I keep saying, Brexit isn't about economics anyway, it's about politics. It was a political decision, not an economic one. It may well have economic benefits, we'll see, but Brexit hasn't happened yet! I say again, and ask any business owner like me, it is the DELAY that is causing uncertainty to affect the economy. And now that complete imbecile May has hinted that it could yet still be delayed until June! It's mind-blowing. We export to Ireland, and we've based all our prices on to our Irish importers on leaving on March 29th. We will have to re-write the whole thing if that idiot doesn't pull us out on that day. I don't care about no-deal, we'll sort it. And I only want a deal if it doesn't continue to tie us in (like that other idiot Corbyn would do). JUST GET US OUT, and let business owners like me get on with providing the country with manufacturing exports.
Going for Hard Brexit makes things worse.
The delay is a mini version of hard brexit. The down sides are because many are having to plan based on Hard Brexit. It is the threat of Hard Brexit that is causing problems. By definition then Hard Brexit will be worse, but stay in this delay long enough it will simulate much of Hard Brexit.
Remember this is a problem caused by the UK deciding to Brexit without knowing what that actualy meant. Now we have the problem that our politicians just cannot face the consequences of a poor negotiation where the options are all worse than they told people. Time to tell the truth. And that is just economy, once they start on the rest.......
As someone who works in a role involving Sales in the Automotive
Yes there are big things going on unrelated to Brexit, but there are also areas where Brexit is hurting now. Let me list them for you.
1 Cash flow, extra stocks are being bought in to try and cover for potential supply disruption, this cash has to come from somewhere also there is extra work trying to work around and plan for all the contingencies and possible scenario.
2 Investment delays. A lot of UK based investment decisions have been delayed or put off till the situation is known. This may not mean much now but it puts continuation of work in UK factories at risk. this has an impact in the 2 years plus horizon. Simply put if you are an international company facing puttign investment into an existing UK plant or one that will stay in the EU you have to build the UK business case assuming Hard Brexit and that makes the UK less attractive in comparison.
3 Reputation. A softer one, but Brexit has damaged the UK reputation abroad and that makes it harder to pitch new work. It is not for no reason that the £ fell on the Brexit vote result and every time we luch towards hard Brexit it gets worse and towards softer Brexit/ No Brexit it gets better.
It is not too say that Brexit is the reason for all the problems, but to say that it makes coping with all the stuff going on in the world harder. Lets look at it this way. I will not win a race against Bolt, well not fairly. My options are to train and exercise to close the gap a bit or do less exercise and wonder why I get slower.
If there is to be calls of treason, make it against those who harm the country.
Such poor reporting
Begining to be put off by Autocar reporting now - everything just seems so biased.
Over the past few days we've seen promotional material (it'd be unjust to call them anything else) on Jaguar's facelifts and and within them, wording that's so heavily biased.
And we get it again... UK car manufacturing down for the blah, blah, blah. Mike Hawes says blah, blah, blah...
What about the rest of Europe? Is car manufacturing in France up or down? Are the Italians and Spanish building more or less cars? What about the holy grail of Germany - what's the current state of their car manufacturing?
Twelve years ago, Germany produced 5.7million cars. In 2011 (the highest output) it produced 5.9 million cars. In 2015,16 and 17 it produced 5.7, 5.7 5.6 million cars respectively. And last year production fell to 5.1 million cars - it's lowest output in the past 12 years.
STOP blaming Brexit. STOP rubbishing the UK. STOP twisting facts to suit an agenda. The trend is happening all over Europe folks, it's not peculiar to the UK. If the Chinese or any other market falls, it's a blow to the German's and anyone else who sell them cars just as much as it is to us.
The German economy is almost in recession - I'm sure it would please Mrs Merkel if she too could blame Brexit.