UK motor production to fall by 20 per cent in year of 'carnage'

The UK motor industry will build nearly one in five fewer cars next year, sending production down to the lowest level for more than 20 years, according to the latest estimates.

Overall, the UK industry made 1.62 million vehicles in 2008, nearly 6 per cent fewer than the previous year. But 2009 will see production fall by another 18.9 per cent to just 1.32 million – the fewest since 1986, preliminary forecasts from PricewaterhouseCoopers indicate.

Motor manufacturers and related industries – which between them employ nearly one million people – are already calling on the Government to help ease the dual crises of reduced consumer spending and scanty access to credit. Overall production was down by 33.3 per cent in November alone, big names like Jaguar Land-Rover and the dealership Inchcape are cutting staff, and all major manufacturers have instituted unusually long periods of downtime over Christmas. But far worse is to come, says PwC. "We have only had two quarters of declining sales so far, compared with 11 consecutive quarters in the last recession – so we are really only at the start," Matthew Alabaster, a director, said. "It is carnage."

Only Turkey and Mexico are expected to see greater proportional falls in production than the UK next year, but the picture is not rosy anywhere. Germany will make 11 per cent fewer cars, France 12 per cent fewer, the US more than 15 per cent fewer. The European sector as a whole will see a 12 per cent contraction to 16 million – a 12-year low. Asia-Pacific will drop by 6.5 per cent, eastern Europe by 10 per cent, North America by 17 per cent to 10.5 million, the continent's worst result since the early 1980s.

Even the emerging markets are looking shakey. China has gone from double-digit growth in 2007, to 7.4 per cent growth this year and just 1.5 per cent predicted for 2009. India will go from 10 per cent growth this year to a 3 per cent contraction next.