SMMT — 2022-09-29
Automotive Industry
UK car manufacturing output rose for the fourth consecutive month in August, up 34% year on year to 49,901 units, according to the latest figures published today by the Society of Motor Manufacturers and Traders (SMMT). The performance was, however, -45.9% below August 2019’s pre-pandemic level of 92,158 units, underlining the scale of recovery still needed. The rise, though welcome, follows a very weak performance in August 2021 when production stoppages and extended summer shutdowns caused by the global chip shortage saw volumes plummet to historic lows.
This year, output for the UK increased 33.1% in the month to 10,709 units, while the number of cars built for export rose 34.2% to 39,192 units. Production of battery electric (BEV), plug-in hybrid (PHEV) and hybrid (HEV) vehicles also grew. Almost a third (32.2%) of all cars made in Britain in August were one of these models, equivalent to 16,059 units, with most (70.5%) exported to global markets. Output of BEVs alone more than doubled, rising 115.9% to account for almost one in 10 cars produced.
Year-to-date, however, overall production remains -13.3% down on the first eight months of 2021 at 511,106 units. Overall, it means factories have turned out 78,501 fewer cars so far this year, with output more than half a million units behind average pre-Covid volumes. The sector is now on course to produce fewer than a million cars for the third consecutive year.
The figures come as new analysis from SMMT highlights the staggering energy costs, already the highest in Europe, facing the UK’s automotive vehicle and component manufacturers. With their collective energy bill having risen by more than £100m over the last 12 months to more than £300m,5 the government’s significant intervention to cap prices for businesses over the winter period has temporarily limited further increases, providing timely and vital respite. With these costs expected to more than double again next year, however, and with some manufacturers anticipating even steeper increases, longer term solutions must be found to assure the viability of the sector beyond the end of the cap in six months’ time.
Energy is now the single biggest concern for UK automotive manufacturers, with almost seven in 10 (69%) SMMT members worried about the impact of onerous cost increases on their business operations. They also reported rising costs across the board, with average prices of raw materials up 38%, semiconductors up 95% and logistics up 43%.
While most companies have already implemented extensive energy saving measures and are absorbing increases where possible, the competitive and low margin nature of the industry has meant that almost nine in 10 (87%) are having to pass on costs, stoking inflation. The knock-on effect for many (41%) is that they have been forced to delay or cancel investments, with 13% reducing shifts and 9% resorting to cutting jobs.