The number of new cars built in factories across the UK fell for the seventh month in a row as a hesitant home market strangled production in February, new figures have shown.
A total of 145,475 vehicles rolled off assembly lines last month, which was 4.4 per cent down on the number of units made in February last year.
While export demand was behind by 0.8 per cent, it was a 17 per cent stumble in orders for the UK market that anchored production.
UK manufacturing stutters: Car factories produced 145,475 vehicles last month, which is 4.4% fewer than in February 2017
The declining car-making numbers were confirmed by the Society of Motor Manufacturers and Traders today, which said 28,336 fewer vehicles were assembled for the home market in February compared to 12 months earlier.
It continues what has been a turbulent year for the UK motor industry, which has recorded a significant stall in showroom activity since new VED tax rules were applied last April and threats of diesel surcharges gathered pace.
As a direct result, factories have taken a hit from shrinking sales activity.
Just two months into the calendar year, production figures for UK motor plants are already down 2.3 per cent, with 292,956 vehicles emerging from the nation’s automotive facilities.
Fortunately, overseas demand – which accounts for around 80 per cent of all cars made in the UK – has helped keep production stats away from the cliff edge, with exports up by 0.3 per cent so far in 2018 while domestic demand is down by 11.9 per cent,
Experts have warned that orders for the UK sector ares likely to continue to stutter throughout the next year as yet more VED changes are due next month and diesel continues to dominate the motoring agenda.
SMMT boss Mike Hawes said the latest installment of double-digit declines in production was ‘of considerable concern’ but he hoped last week’s Brexit transition agreement would help build confidence in the coming months.
‘These figures also highlight the scale of our sector’s dependency on exports, so a final deal that keeps our frictionless trade links with our biggest market, the EU, after December 2020 is now a pressing priority,’ he said.
Vehicle production has fallen for 7 consecutive months, the SMMT confirmed on Thursday
Export demand was down by 0.8% in February, though 8 in 10 vehicles made in the UK are still sent overseas
This followed repeated calls from Hawes earlier this week for the UK to secure tariff-free trade deals with Europe to guarantee the future of car building in the country.
He said: ‘The next major hurdle will be securing a new, comprehensive trade agreement with the EU and our partners across the world.
‘In the meantime, government must help make the UK as competitive as possible.
‘Government’s Industrial Strategy and Automotive Sector Deal are positive steps but we need concrete action if we are to stay ahead in what is an intensely competitive global environment.’
He added: ‘Remaining part of the single market and customs union, continued access to EU talent, and the ability to benefit from preferential EU trade agreements with third countries remain the UK Automotive industry’s priorities in the future EU-UK relationship.
‘Equally important, however, is the need for the UK to maintain influence within EU regulations, both during transition and after Brexit, as critical decisions are taken on shared issues such as CO2 and data – issues which will ultimately affect UK consumers, exporters and other businesses.’
Production is now down by 2.3% in the first two months of 2018, and demand from the home market is likely to continue shrinking
Mike Hawes said the onus was now on the government to help make the UK car manufacturing industry ‘as competitive as possible’
Justin Benson, head of Automotive at KPMG in the UK, said manufacturing was likely to continue to slow all the way through the build up to the UK’s divorce from the EU.
He said UK buyers would continue to be cautious in the uncertain economy, though export demands should keep figures afloat.
‘With one year to go until the UK leaves the EU, domestic demand continues to fall,’ he said.
‘Like most manufacturers, consumers are waiting to see how the economy develops over the next 12 months. However those looking to buy shouldn’t wait too long, as now is a good time to haggle with dealers currently offering good deals.
‘For manufacturers there is opportunity in the numbers.
‘Exports remain robust at historically high levels. 80 per cent of vehicles made in UK are exported, and with strong overseas economies such as the USA and China, our automotive manufacturers can take full advantage of their great brands and the value of the pound to continue to grow robust sales overseas.’
However, not everyone has pointed the finger of blame at Brexit.
Alex Buttle from car selling comparison site Motorway.co.uk said the confusion surrounding the future of diesel cars has pushed the county’s drivers into a ‘painful transition period’ as they feel forced by government to make an early switch to electric vehicles.
‘Consumers are being put off new diesel cars by new car tax rates and potential toxin taxes down the road, while the choice of electric and hybrid cars is limited with a lack of infrastructure holding off rapid growth in sales,’ Buttle said.
‘The government has also been slow to define its cleaner air strategy, compounding the problem.
‘The UK car industry has its work cut out to regain the confidence of a consumer confused by the automotive options available and unsure of the likely economic impact on their finances of any car purchase choice they make.’
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