Car manufacturing in the UK took off dramatically last year. The head of the industry’s trade body has described the situation as the ‘toughest in decades’, and the numbers are certainly support your claim.
Latest car registration figures show 2021 has been up just 1% on a COVID-ravaged 2020 — and production actually went into reverse.
Overall car manufacturing through November 2021 was 6.2% lower than in 2020, with 797,261 cars made – worse even than a year in which UK production was so badly affected by factory shutdowns caused by the first lockdowns.
This matters not only for the 180,000 people employed directly in automotive manufacturing or the 864,000 jobs in the entire automotive industry. The industry accounts for 13% of the UK’s total goods exports, worth £44bn, and invests £3bn each year in automotive research and development.
It’s not just a problem for the UK. The global shortage of microchips has had a major impact in 2021 and could cost up to US$210bn (£155bn) in lost sales in 2022, with reduced production of nearly 8 million vehicles.
Of the cars made in the UK, more than 80% were to be exported, with most of them (around 60%) destined for the EU. Asia accounted for 15.6% of UK car exports, the US 13.4% and Australia 1.2% (this new trade agreement with Australia is welcome, but will not really increase UK car exports). Overall, exports to the EU fell 29% from the same period in 2020, with more dramatic falls further afield, down 57% to Japan and 67% to the US .
Now Society of Motor Manufacturers and Traders chief executive Mike Hawes has called for more industry support. He also flagged the risks associated with the new customs arrangements between the UK and the EU which will come into force on January 1, 2022.
He said: “With an increasingly negative economic backdrop, rising inflation and the resurgence of Covid at home and abroad, the circumstances are the most difficult in decades.
“With production massively down over the past five months and likely to continue, maintaining cash flow, particularly in the supply chain, is vitally important. We must look to the government to that it provides support measures in the same way it recognizes other COVID-affected sectors.”
A smoother journey
For the future, a new production perspectives report forecasts that UK car and van production could exceed one million in 2022, and even reach 1.2 million in 2024. In 2016, the UK produced 1.7 million one year. But that now seems a very long time ago, with production since damaged by a combination of global markets, Brexit-related uncertainty and COVID-related supply chain issues.
Looking further ahead, the auto industry faces the most dramatic change in its history, with a rapid transition underway to battery electric vehicles. The British government has set a deadline 2030 to phase out the sale of petrol and diesel cars, but the policies to achieve this seem timid.
Progress is not aided, for example, by slow speed the rollout of charging infrastructure, or the sharp reduction in subsidies available for new battery electric vehicles, which means that many do not receive support.
On a positive note, UK production of battery electric vehicles and hybrid cars (with a combustion engine and a battery) has taken a recording sharing of production in 2021, accounting for around a third of all cars made in November, and more than a quarter (26%) for the year.
Among these, production of battery electric vehicles rose 53% in November to 10,359 units, hitting a new high of nearly 14% of production, more than double the level a year ago. year. UK-based automakers like Nissan, MINI and the London Electric Vehicle Company produced more than 60,000 zero-emission vehicles in 2021.
But battery production in the UK is fall behind major investment across the EU, which aims to be independent in battery production by 2026, and brought together seven countries to form the European Battery Alliance. And while there is confirmed investment in just one battery ‘gigafactory’ in the UK, there are at least 15 being built in countries like Sweden, France, Germany, Hungary and Poland.
Investment in battery production in the UK will need to be accelerated significantly given the ongoing transition to electric vehicles. Beyond that, better and more united support for the automotive industry will be needed to achieve 2030 with a viable mass British car industry intact.