British car industry at lowest level since… 1956

According to figures from the sector federation SMMT (Society of Motor Manufacturers and Traders), vehicle production in the UK dropped to its lowest point in almost 70 years. However, a revival is due for the year 2023.

“The automobile industry in the UK has been going through three horrible years,” resumes Mike Hawes, general director of SMMT. “Last year was the worst since 1956,” he adds, “which shows how dramatic it was. In 2022, we were at 40% of the production level in 2019.”

Compared to 2021, car production decreased again by 9,8% and fell to 775 014 units. At the beginning of this year, SMMT already announced that car sales in the UK had been at the lowest in 30 years.

Multiple reasons

Of course, there is the enduring semiconductors shortage, which is playing a role. Still, British production figures also suffered from the high energy costs and several interruptions in the supply chain in China due to Covid-19 lockdowns. “These are all factors that have played on a global scale,” says Hawes, “but the UK has also suffered from factory closings.”

The Honda plant in Swindon (south of England) was closed in the summer of 2021, and the Vauxhall plant in Ellesmere Port (northern England) stopped production in the spring of last year. However, it will be reconverted to produce electric vans.

The sector hopes the lowest point has been passed as several reasons for the dramatic fall are fading out. “We start 2023 with a whiff of optimism,” Mike Hawes assures. “This year, there will be growth; the order books are filled up, and production has to gear up again to meet demand.” SMMT hopes for a 15% increase in the production of cars and vans and to reach the 1 million benchmark again by 2025.

Electrification can be the savior, but what about Brexit?

The SMMT is very happy that one-third of the production in the UK was already hybrid or fully electric. The export value of those types of cars and vans has increased sevenfold since 2017 to £10 billion.

Unfortunately, British industry has again been struck by a significant setback: Britishvolt, the prestigious start-up wanting to build a gigafactory for batteries, has gone bankrupt, and Ernst and Young have been asked to look for acquirers. An Australian start-up, Recharge Industries, is interested, but nobody knows if their pockets are deep enough.

As 80% of the British car production is exported, SMMT also worries about new, more stringent rules concerning the sales of electrified vehicles in the EU, and vice versa. Until now, a post-Brexit agreement stipulated that this could be done with a tax exemption.

“In 2024, more of the EVs parts will have to be sourced in the EU or the UK, which is a handicap for both the European and British manufacturers, as they are still very dependent on third countries for their battery parts, Hawes remarks.

If there is no new agreement between London and Brussels, 10% customs fees are possible, warns SMMT. Last year, the export of the British car industry to Europe, its most important market, had already melted away by 10%