UK car manufacturing halves in April due to Brexit-related shutdowns

UK car production nearly halved in April with 56,999 fewer units built as factories across the country were shut in anticipation of the original date for Brexit.

According to figures published on Thursday by the Society of Motor Manufacturers and Traders, production fell by 44.5% year-on-year.

Manufacturing for the domestic and overseas markets fell by 43.7% and 44.7% respectively, as most volume manufacturers brought forward, and extended, production stoppages normally scheduled for the summer holiday period.

The factory shutdowns were an issue because they had originally been rescheduled in order to mitigate the uncertainty that had been expected to ensue following the original 29 March Brexit date. Since then, that date had been delayed until 31 October, but manufacturers would not be able to pull-off a similar shift in the timing of shutdowns.

This costly and ongoing contingency measures in industry, including stockpiling, rationalisation, training for new customs procedures, rerouting of logistics etc which were designed to protect business after the divorce had not been as efficient as they might have been because of the delay.

Nonetheless, Brexit was not the only reason for the drop in output. April’s dismal performance marked the 11th consecutive month of declines with slower demand from overseas, including from markets such as the EU, China and the US also playing a role.

“In the year to date, 127,240 fewer cars have been built compared with the same period in 2018 – a decline of more than a fifth (-22.4%) – with similarly large percentage falls in production for the UK and export,” the report said.

Looking ahead, if the UK left the EU with a favourable deal and accommodation was made for a substantial transition period, then notwithstanding any escalation of global trade tensions, the decline in volumes was expected to ease by the end of 2019, according to the business lobby group.

But even then, the latest independent outlook suggested output will still be down some -10.5% on 2018 levels, SMMT said. That would be especially true in case of a ‘no deal’ Brexit, with the threat of border delays, production stoppages and additional costs compromising competitiveness, exacerbating any decline.

Mike Hawes, SMMT Chief Executive, said: “Today’s figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers. 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.

“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.”