UK car production rises for third consecutive month

UK car production rose for the third consecutive month in July, up 8.6% to 58,043 units, according to the latest figures published today by the Society of Motor Manufacturers and Traders (SMMT). The performance must be set in context, however, as it is compared with July 2021, which was the worst July since 1956 as car makers faced the global shortage of semiconductors and staff absences arising from the ‘pingdemic’, forcing some to alter summer shutdown timings to help manage the challenge.

This July, factories turned out 4,605 additional units, a sign that component shortages may finally be beginning to ease. Output, however, still remains below pre-pandemic levels, at -46.4%, illustrating that a full recovery is some way off.¹ Production for the UK market surged 40.7% to 11,583 units, with exports also up, but by a more modest 2.8%, in part reflecting the structural and model changes at play.

Shipments continue to drive the sector, accounting for eight out of 10 cars made (80.0%), though exports to top markets the EU and US fell, down -7.3% and -22.8% respectively, while orders from China and Japan rose 54.0% and 40.1% respectively. Almost a third (29.9%) of all cars made in July were either battery electric (BEV), plug-in hybrid (PHEV) or hybrid electric (HEV), amounting to 17,356 units, with BEV volumes up 65.9%.

Despite three months of growth, year-to-date UK car production is -16.5% below the same period in 2021, at 461,174 units, representing a shortfall of 91,187 units. The decline is attributable to supply chain shortages, structural changes and weak exports, which fell -21.3% to 363,223 units, with a 7.6% rise in production for the UK unable to offset these losses. Some 78.8% of all cars made in Britain since January have been shipped overseas, with some six in 10 of them (59.3%) destined for the EU.

Mike Hawes, SMMT chief executive, said, “A third consecutive month of growth for UK car production is, of course, welcome and gives some hope that the supply chain issues blighting the sector may finally be starting to ease. But other challenges remain, not least energy costs which are increasing at alarming rates. If we are to attract much needed investment to drive the production of zero emission vehicles, urgent action is needed to mitigate these costs to make the UK more competitive for manufacturing. This must be a priority for the next prime minister else we will fall further behind our global rivals, risking jobs and economic growth.”