Production slumps as global demand falls

British car production slumped 14.4% in March, making it the 10th month in a row that production has decreased. Falling demand in Asia and Europe has been described as a ‘significant’ factor.

According to the Society of Motor Manufacturers and Traders (SMMT), 126,195 units rolled off factory lines last month, with production for both home and overseas markets declined in double digits, down 18.1% and 13.4% respectively.

Alongside the recent downward trend in demand in key Asian and European markets, model changes and shifting car segment preferences globally were also blamed for the poor figures.

Although UK exports fell in March, they increased their share of overall production year-on-year to 78.7%.

Meanwhile, the latest independent production forecast is also published this week illustrating what’s at stake for British car manufacturing following Brexit. Assuming a positive result to the negotiations with a favourable deal and transition period maintaining the status quo, UK car production could be 1.36 million units in 2019, down from 1.52 million in 2018, before rising to 1.42 million by 2021.

However, should Britain fall back on WTO rules for a sustained period, output is forecast to fall around 30% on recent levels to just 1.07 million units by 2021, a level consistent with the dark days of the mid-1980s.

Mike Hawes, SMMT chief executive, said, ‘Despite the extension, the Brexit clock is still ticking and a devastating ‘no deal’ remains a threat. This new period of limbo does not end the havoc for industry, with investment stopped and expensive factory shutdowns moved to avoid a Brexit deadline that has itself now moved.

‘Just a few years ago, industry was on track to produce two million cars by 2020 – a target now impossible with Britain’s reputation as stable and attractive business environment undermined. All parties must find a compromise urgently so we can set about repairing the damage and diverting energy and investment to the technological challenges that will define the future of the global industry.’