Last year, car production in the United Kingdom came to a halt. The situation has been characterized as the “toughest in decades” by the leader of the industry trade group, and the data back up his assertion.
According to the most recent automobile registration numbers, 2021 was just 1% higher than a COVID-ravaged 2020, and production actually went backward.
The United Kingdom’s automobile production fell by over 29% in November 2021, the fifth consecutive month of decline and the lowest since the mid-1980s. The numbers for October were the worst since the 1950s.
Consequently, automobile output was 6.2 percent lower in November 2021 than in November 2020, with 797,261 vehicles produced – poorer even than the year in which UK manufacturing was severely hampered by plant shutdowns induced by the initial lockdowns.
This is important not just for the 180,000 people working directly in the automotive sector, but also for the 864,000 employment in the industry as a whole. The automotive sector contributes for 13% of total UK exports, valued at £44 billion, and spends £3 billion annually in research and development.
This isn’t simply a British problem. The worldwide microprocessor shortage had a significant effect in 2021, and it is expected to cost the global car industry up to US$210 billion (£155 billion) in missed sales in 2022, with production reduced by about 8 million vehicles.
Over 80% of the automobiles produced in the UK were destined for export, with the majority (60%) destined for the European Union. Asia accounted for 15.6 percent of UK auto exports, the US 13.4 percent, and Australia 1.2 percent (that new trade pact with Australia is great but won’t actually help UK car exports much). Overall, exports to the EU decreased by 29% from the same time in 2020, with more severe drops farther afield, including a 57% drop to Japan and a 67% drop to the United States.
Mike Hawes, the CEO of the Society of Motor Manufacturers and Traders, has now asked for further government assistance for the sector. He also warned about the dangers of new customs agreements between the UK and the EU, which will take effect on January 1, 2022.
“The conditions are the hardest in decades,” he added, citing an increasingly gloomy economic background, rising prices, and Covid’s resurgence at home and abroad.
“With production down dramatically over the previous five months and expected to continue, managing cash flow is critical, particularly in the supply chain.” We must turn to the government for assistance in the same manner that it recognizes other COVID-affected industries.”
A more pleasant ride
A new production outlook analysis predicts that UK vehicle and van production will exceed one million in 2022, and even reach 1.2 million in 2024, according to the report. In 2016, the United Kingdom produced 1.7 million per year. However, it feels like a long time ago, since production has been harmed ever since by a mix of global markets, Brexit uncertainty, and COVID-related supply chain concerns.
Longer-term, the car industry is undergoing the most significant transformation in its history, with a fast move toward battery-powered electric vehicles already occurring. The UK government has set a deadline of 2030 for the sale of petrol and diesel automobiles to be phased out, but strategies to get there seem half-hearted.
The sluggish pace of charging infrastructure deployment, for example, or the significant reduction in subsidies available for new battery-electric cars, which means that many do not qualify for assistance, are stifling progress.
On the plus side, British production of battery electric vehicles and hybrid automobiles (cars with both a combustion engine and a battery) set a new high in 2021, accounting for over a third of all cars produced in November and more than a quarter (26%) for the year.
EV manufacturing increased by 53% to 10,359 units in November, reaching a record high of about 14% of total production, more than twice the amount a year before. Nissan, MINI, and the London Electric Vehicle Company, all located in the United Kingdom, produced over 60,000 zero-emission cars in 2021.
However, UK battery manufacturing is trailing behind substantial investment throughout the EU, which is seeking to be battery-independent by 2026 and has formed the European Battery Alliance with seven nations. While just one battery “gigafactory” has been verified in the UK, at least 15 are now under development in countries such as Sweden, France, Germany, Hungary, and Poland.
Given the current move to electric cars, investment in battery manufacture in the UK will need to be considerably increased. To get to 2030 with a sustainable mass UK car sector intact, greater and more coordinated support for the industry will be required.
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