Motor industry calls on government to outline Brexit plans
The UK motor industry has called on the government to
outline its European Union departure plans as domestic car production fell by 13.7%
A total of 136,901 cars rolled off UK production lines
last month, according to figures released by the Society of Motor Manufacturers
and Traders (SMMT). It was the third consecutive month of decline and means a 2.9%
year-to-date dip in output. The performance is, however, still the second
highest for 12 years.
Production for export continued to underpin volumes in
2017 with overseas demand for British-built cars falling by only a marginal 0.9%
in the first six months, with 683,826 cars shipped overseas. The percentage of
cars for export now stands at 78.9% - the highest for five years.
Meanwhile, demand from the home market declined 9.5% to
182,830 units, as the UK new car market cooled in line with forecasts following
a long period of record growth.
Although there is much uncertainty, production is
forecast to rally in the second half of 2017, according to the latest
independent forecast. The projection is based on some new models and updates
planned for production later this year, many from premium brands, helping
cement the UK as the world’s second biggest producer of premium cars after
However, market softness both in the UK and certain key
export markets may see the 2017 forecast revised.
Looking further ahead, said the SMMT, the base outlook, which
assumes some sort of Brexit deal in place, has been revised such that, by 2020,
the analysis forecasts the sector just missing the ambition of two million cars
As concerns mount over Brexit and the effect of the
ongoing uncertainty on investment, the analysis also suggests that failure to
secure a deal - or, at the very least, an interim arrangement maintaining
current trading conditions - could cause output to fall in 2019, said the SMMT.
Supply chain disruption caused by ‘hard’ border controls
as the UK left the customs union and price increases driven by World Trade
Organisation tariffs, could result in a 10% hit to production, taking volumes
back to 2016 levels, it is claimed.
Mike Hawes, SMMT chief executive, said: “World-class
engineering, productivity, strong government collaboration and massive
investment in the past few years have helped UK automotive become a global
success story. At the heart of this has been the free and frictionless trade
we’ve enjoyed with the European Union - by far our biggest customer and
“But Brexit uncertainty is not helping investment and
growth is stalling. The government has been in “listening” mode but now it must
put on the table the concrete plans that will assure the future competitiveness
of the sector. Investors need certainty so, at the very least, the UK must seek
an interim deal which maintains single market and customs union membership
until we have in place the complex new agreement sought with the European