UK Car Production Declines in April, but Electric Vehicle Production Shows Promise

UK car production fell by 11.3% in April.

Recently, the Society of Motor Manufacturers and Traders (SMMT) reported a significant decline in car production in the UK. According to data from the SMMT, car production in the UK fell by 11.3% year-on-year to 60,554 units in April. This figure was also 14.7% lower than the level before the pandemic in April 2019. The decline in UK car production can be attributed to various factors, including the persistent global shortage of semiconductors and the impact of the escalation of the Russian-Ukrainian situation on the supply chain.

Electric vehicle production increases in the UK.

However, amidst the overall decrease in car production, there was a silver lining in the data. More than a quarter of all cars produced in the UK in April were electric vehicles, including both hybrid and pure electric vehicles. Specifically, the production of electric vehicles in the UK was 16,010 units in April, an increase of 2.1% year-on-year. Additionally, the production of pure electric vehicles increased by 38.2% year-on-year. This is an encouraging sign for the UK's automotive industry, which is transitioning to zero- and ultra-low-emission vehicles. The increase in production of electric vehicles may stem from the UK's push to meet its carbon reduction goals. The UK has set a goal to reach net zero carbon emissions by 2050, and the production of electric vehicles is an important step towards achieving this goal.

Calls for the UK government to introduce new policies to support the manufacturing industry

However, this decline in car production has led to calls for the UK government to introduce new policies to protect and support the manufacturing industry and encourage investment. In a recent interview, Mike Hawes, SMMT Chief Executive, highlighted the various issues that are affecting the UK automotive industry, such as rising energy costs, additional trading costs, and slowing global markets. These factors have exacerbated the global chip shortage and supply chain disruption, which have further weakened production and competitiveness. Hawes emphasised that while the UK has a strong foundation in the automotive sector, more policies and measures are needed to support manufacturing and encourage investment in the UK during these challenging times. The UK government has already introduced policies to support the automotive industry, including a £500 million investment fund to support the development and production of zero-emission vehicles.

The UK automotive industry could focus on strengthening ties with the EU.

Furthermore, SMMT data showed a significant decline in exports from the UK last month due to the closure of the Honda Swindon factory in July 2021. The production of cars for export from the UK fell by 20.8% year-on-year last month, from 60,331 to 47,786 units. This decline in exports could have significant long-term implications for the UK's economy, and it remains to be seen how the government will address this issue. However, despite this decline, exports to the EU rose by 5% year-on-year, while exports to the US and Asia fell by 68% and 10.4%, respectively. This suggests that the UK's automotive industry could focus on strengthening its ties with the EU to offset the impact of the factory closure and declining exports. The UK government has already signed trade deals with EU countries to ensure that exports to the EU are not affected by Brexit, and it may be beneficial for the UK to continue to strengthen its ties with the EU to stabilise its automotive industry and exports.