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UK Car Production Falls By 27% In Worst January In Over 10 Years

18 Mar 2021

Due to global supply chain issues caused by Covid-19 and trading friction following Brexit, only 86,052 cars were built in the UK in January 2021.

Due to global supply chain issues caused by Covid-19 and trading friction following Brexit, only 86,052 cars were built in the UK in January 2021.

 
This represents a drop in UK car production of 27.3% Year-on-Year and marks the worst January since 2009 as well as the seventeenth consecutive month of decline. 
 
The primary cause of this decline is the ongoing supply chain issues caused globally by Covid-19, as well as the numerous car dealerships that have had to be closed in the UK during the lockdown restrictions. In addition to this, the Brexit transition period coming to an end on the 31st December has also had an impact, as the ongoing friction around new trading agreements has affected output.
 
This overall drop in car manufacturing in the UK was caused by a drop in production for both domestic and overseas markets, which fell by 18.3% and 29.1% respectively. Cars manufactured for export made up more than eight out of ten cars produced in January, but shipments to the EU, US and Asia all fell, by 26.2%, 34.5% and 36.1% respectively.
 
Having said that, there were still some positives, with the combined output of electric, plug-in hybrid and conventional hybrid cars rising to 25.3% of all cars produced in the UK in January. Although the overall drop in production means that the UK automotive industry has seen a total loss of £11.3 billion since March 2020.
 
These figures have led to calls for the UK Government to reopen car showrooms as soon as possible, as well as new measures to be implemented to assist with the sector’s competitiveness on the global market. 
 
The chief executive of The Society of Motor Manufacturers and Traders (SMMT), which released the above figures, stated: “Yet another month of decline for UK car production is a grave concern and next week’s Budget is the Chancellor’s opportunity to boost the industry by introducing measures that will support competitiveness, jobs and livelihoods.
 
“Whilst there have been some very welcome recent announcements, we need to secure our medium to long-term future by creating the conditions that will attract battery gigafactory investment and transform the supply chain.
 
“Most immediately, however, we must get our Covid-secure car showrooms back open, ideally before 12 April. This will be the fastest way to UK automotive manufacturing recovery.”
 
It is clear to see that the UK automotive industry is facing a number of challenges that we have seen many industries faced with curing the Covid-19 pandemic and the wake of Brexit, but this seems to be just the latest in a long string of challenges that the industry has faced. Due to this,  there is a need for changes to be made to help the industry continue, not just domestically, but also on the global market. As the year continues, we hope that things will recover as the restrictions caused by Covid-19 are relaxed and with time more trade agreements following on from Brexit should be implemented that will help to remove the current supply chain issues.