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UK car industry on 'red alert'

UK car industry on 'red alert' as production falls at its fastest rate since the recession.
Posted on 01 February, 2019
UK car industry on 'red alert'

UK car companies are urging all politicians to do whatever it takes to avoid a ‘no deal’ Brexit as latest figures from the Society of Motor Manufacturers and Traders (SMMT) show British car production fell to its lowest level for five years in 2018.

Just over 1.5 million new cars left UK factories, a decline of 9.1 per cent, and the second consecutive annual fall as the sector faces multiple challenges.

The news comes as SMMT also reveals that fresh inward investment in the sector plummeted in the year – down almost half on 2017 to just £588m, amid fears over the UK’s future trading prospects with the European Union and other key global markets after March 29.

"With fewer than 60 days before we leave the EU and the risk of crashing out without a deal looking increasingly real, UK Automotive is on red alert. Brexit uncertainty has already done enormous damage to output, investment and jobs," says SMMT chief executive Mike Hawes.

"Yet this is nothing compared with the permanent devastation caused by severing our frictionless trade links overnight, not just with the EU but with the many other global markets with which we currently trade freely.

"Given the global headwinds, the challenges to the sector are immense. Brexit is the clear and present danger and, with thousands of jobs on the line, we urge all parties to do whatever it takes to save us from ‘no deal’."

In 2018, production for the UK fell 16.3 per cent as regulatory changes and ongoing uncertainty over future diesel policy and taxation were exacerbated by declining consumer and business confidence.

Exports were also down, with output for overseas markets dropping 7.3 per cent as slowdowns in important European and Asian markets took effect.

UK car exports to China slumped 24.5 per cent, while EU demand fell by 9.6 per cent, less steep than the decline in the UK, with registrations of British-built cars in the UK down 20.9 per cent in the year.

Overall, EU27 countries still accounted for the vast majority of UK exports – amounting to 650,628 cars.

However, elsewhere, consumers responded to increased availability of several new premium models currently built only in the UK.

Exports to the US grew 5.3 per cent, cementing the country’s position as the UK’s second biggest customer after EU and underlining the risk to output if tariffs are imposed. Meanwhile, exports to Japan rose 26.0 per cent and South Korea also showed growth.