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UK car production rose last month on the back of an increase in exports of luxury vehicles, but output remains well below pre-pandemic levels, new data shows.
A total of 69,524 cars were built in October, up 7.4 percent from the same month a year ago, according to the Society of Motor Manufacturers and Traders (SMMT).
However, industry experts and analysts predict that the growth could be short-lived, with cost of living and pressure on consumer spending likely to stifle demand for new cars in the coming months.
Return to growth for UK car output – but for how long? Industry insiders reacted to a 7.3% increase in vehicle production in October and warned that the cost of living is about to bite
The trade body said exports of expensive premium and specialty models, mainly to the European Union, had boosted production.
The rise followed a decline in September, which came after four consecutive months of growth, demonstrating how supply chain turbulence, particularly global chip shortages, continues to affect British automakers, SMMT said.
Orders from abroad drove UK production, with more than 80 per cent of new cars going abroad, equivalent to 56,469 units, while 13,055 vehicles were delivered for the domestic market.
Export growth was led by rising shipments to the US, Japan, South Korea, Australia and Turkey, although the majority of cars (54.9 percent) shipped overseas went to the European Union, the SMMT said.
The trade body said exports of expensive premium and specialty models, mainly to the European Union, had boosted production
Although production growth was recorded in October, production remains well below pre-pandemic levels
Production numbers were also supported by the UK’s continued production of low-emission cars, including battery electric vehicles, plug-in hybrids and conventional hybrid vehicles.
These greener cars represented more than one in three (34.7 percent) of all engines leaving the factory in October – some 24,115 units.
In the year to date UK car factories have produced a record 61,339 BEVs, up 16.2 per cent from the same period in 2021.
Mike Hawes, CEO of SMMT, said: “A return to growth for UK car production in October is welcome – although production is still significantly below pre-Covid levels amid turbulent component supply.
“Getting the industry back on track by 2023 is a priority given the jobs, exports and economic contribution of the automotive industry.
UK carmakers are doing everything they can to ramp up production of the latest electrified vehicles and help deliver net zero, but more favorable conditions for investment are needed and urgently needed – especially in affordable and sustainable energy and talent availability – as part of a supporting framework for car production.’
Orders from abroad drove UK output, with 81% of cars going overseas, equivalent to 56,469 units, while 13,055 cars were delivered for the domestic market
Export growth was led by rising shipments to the US, Japan, South Korea, Australia and Turkey, although most cars (54.9%) shipped overseas went to the EU
While Mr Hawes remains optimistic about the UK’s supply of electrified cars, experts warn production in Britain is likely to be hit by the cost-of-living crisis and a diminished appetite for new vehicles.
Richard Peberdy, UK head of automotive at analyst group KPMG, said: “While manufacturers are still working their way through order books built up due to a limited supply of new cars, new consumer demand for vehicles is increasingly at risk as the cost of living is rising.’
He also warned that inflation will hit automakers, who will look to MPs to ease some of the financial burden.
The new consumer demand for vehicles is increasingly under threat as the cost of living rises
“Car production costs are rising, with a range of materials becoming more expensive due to inflation, and the industry is nervously awaiting the outcome of the government review of energy price support for businesses after the end of March.
“Exposure to rising energy prices in 2023 would put further pressure on new car prices and threaten the global competitiveness of the UK car industry.”
Steve Huntingford, editor of What Car?, commented: “While the six-month corporate Energy Bill Relief Scheme offers some short-term relief for manufacturers, the industry continues to face rising production costs at a time when it is set to investing heavily in electrification and battery assembly.
“We’ve already seen rising costs result in higher prices for new cars, and possibly delaying or reducing investment in electric vehicle production.”
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