The variety of cars inbuilt the UK in the primary half of the 12 months has fallen by a fifth as manufacturers continued to struggle to get their hands on parts required for contemporary models.
The 403,131 latest vehicles produced in factories between the beginning of January and end of June will not be only 95,792 fewer than the identical period of 2021 but additionally lower than the half-year output for a lockdown-ravaged 2020 and worse than the opening six months of 2009 through the global financial crash, official records confirm.
While part supplies are showing signs of stabilising, industry experts say the sector’s recovery will likely be derailed by rising energy costs and consumers being gripped by the cost-of-living crunch.
Automotive outputs slide: Just 403,131 latest vehicles got here off UK production lines in the primary half of the 12 months. That is fewer than in 2009 through the global financial crash
Figures published by the Society of Motor Manufacturers and Traders this morning show that automotive manufacturing in the primary six months of the 12 months is nineteen.2 per cent down on 2021.
The principal cause stays shortages of key components, most notably semiconductors, with supplies severely limited for the reason that pandemic hit over two years ago.
Access to parts was further exacerbated by the war in Ukraine, blocking certainly one of the most important supply lines for wiring harnesses particularly.
The closure of Honda’s Swindon plant last 12 months also meant there can be an inevitable decline in outputs following the lack of certainly one of the country’s biggest automotive production plants.
Despite this difficult backdrop, June recorded a 5.6 per cent uptick in output, with 72,946 units built because the parts supply chain has began to extend.
Although this was the perfect June performance for the reason that start of the pandemic it was still a 3rd down on pre-pandemic 2019 levels.
A growth in electric vehicle production also had an element to play in keeping the sector ticking over, especially last month as outputs rose by a record 44.2 per cent.
It means 32,282 battery-electric models got here off UK production lines in the primary half of the 12 months, which is a rise of 6.5 per cent year-on-year.
While automotive manufacturing outputs in June were marginally higher than the identical month in 2021, production is significantly behind the record levels seen between 2016 and 2018
But worse is ready to come back for the sector, with further energy price hikes looming, making vehicle production increasingly expensive.
With this in mind, the SMMT has further downgraded its annual production output – not for the primary time this 12 months, having already lowered its prediction in March.
It now estimates that 866,000 cars will likely be produced in total this 12 months, which represents a growth of 1 per cent on 2021 volumes.
Output is targeted to enhance further in 2023 to 956,575 units, before surpassing a million units by 2025 as supply chain issues recede further.
Commenting on the half-year report, Mike Hawes, SMMT chief executive, said automotive makers have ‘suffered from a “long Covid” for much of 2022’.
‘As these issues recede over the following 12 months or two, investment in latest technologies and processes will likely be essential but this can rely upon our underlying competitiveness,’ he said before highlighting the brand new set of headaches facing the sector in the approaching months.
He adds: ‘Sky-high energy costs, non-competitive business rates and skills shortages must all be addressed if we’re to construct on our inherent strengths and seize the opportunities presented by the dash for decarbonised mobility.’
Experts says a shortage of components, namely semiconductor computer chips, is showing signs of easing, but manufacturers face a set of recent headaches with energy bills soaring and consumers gripped by the cost-of-living crunch
Chris Knight, UK automotive partner at KPMG, shared Mr Hawes’ concerns for the months ahead – and warned it could likely end in higher vehicle prices for purchasers.
He told us: ‘The price of automotive manufacturing has increased because of price rises of raw materials, components, transport and energy.
‘Manufacturers have limited ability to soak up additional cost and can pass this onto consumers in the shape of upper prices.
‘Consumers are willing to pay a premium for now, as demand for brand spanking new cars still far outpaces supply, nonetheless this willingness may decline if consumer confidence erodes.’
Jim Holder, What Automotive?’s editorial direction, says the nation’s automotive manufacturing sector is now ‘walking a tightrope’ attempting to recuperate from its most difficult period while also attempting to navigate a cost-of-living crisis and a once-in-a-century transition towards electric vehicle and carbon-neutral manufacturing.
‘Already, the UK automotive industry has made giant environmental strides, but it surely cannot manage the transition without support in such a restricted market,’ he warned.
Last week, What Automotive? said over a 3rd of motorists anticipating buying a automotive this 12 months have decided to delay their purchasing plans, with many putting their intention on hold until 2023.
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