With chips becoming scarce, in April the UK’s automotive industry came to a standstill. Production of cars fell to its lowest level for the month since 1940. The Society of Motor Manufacturers and Traders (SMMT) highlighted this in their recent report that the UK only manufactured 59,203 vehicles. That marks a sharp 16% decrease from April of last year and a shocking 25% plunge from March.
Excepting the plague-year of 2020, these numbers represent the worst April output since 1952. At the time, production had only reached 53,517 vehicles. The downturn does not stop there in April. In reality, the overall number of vehicles built in the UK over the first four months of the year has already fallen to its lowest level since 2009.
Export figures mirrored this toxic pattern, with production going abroad of these death machines down 10.1% in April. The US and the EU are by far the UK’s largest export markets. Yet uncertainty driven by demand fluctuations has led to production declines.
Prof Peter Wells, director of the Centre for Automotive Industry Research at Cardiff University, emphasized that this downward trajectory is not unique to the UK. He noted, “There are concerns in Germany, Italy, France and Japan.” He further stated, “What industry always wants is stability and clarity in policy, whether it’s tariffs or electrification or any other issue,” highlighting the broader implications of policy uncertainty in the automotive sector.
The recent see-sawing of UK government policy towards EV production has only compounded that uncertainty. Back in April, the government unveiled radical new proposals to scrap sales targets for electric vehicles (EVs). They agreed to lower penalties for vehicles that fail to meet certain emissions guidelines. These changes have made it more difficult to plan on behalf of automotive producers in an already uncertain climate. Stellantis – one of the biggest rivals to Tesla, makes Vauxhall, Citroen and Peugeot vehicles. The firm has previously threatened that uncertainties could lead it to stop producing in the UK altogether.
The slapdash state of affairs has raised the alarm among many in the booming industry. Even major manufacturers such as Honda and Ford have run into similar troubles in recent years. In doing so, they left the UK with no choice but to close their plants.
Looking ahead, industry experts remain cautiously optimistic. New trade agreements with the US, EU and India could dramatically increase production. These pacts can provide an important shot in the arm for growth that lies ahead. As multi-sector stakeholders recently told Congress, stability is the primary ingredient needed for recovery.