UK car manufacturing falls again as industry experts call for Brexit safeguard

Exports continue to shore up demand for UK-built cars, which means a no-deal Brexit is 'not an option' for the sector, SMMT warns

Caitlin Morrison@citycait
Thursday 27 September 2018 12:55
Bob Shanks CFO at Ford, explains how Brexit is weighing on the car giant's profits

UK car production dropped by 13 per cent in August, the Society of Motor Manufacturers and Traders (SMMT) said, as it repeated calls for Brexit negotiators to make protecting the industry a priority.

The decline in output was due to a combination of model changes, planned factory shutdowns and ahead of new emissions standards, the SMMT said.

The trade body also noted that exports continue to be the main driver of demand for UK-built cars, and said that this highlights the need for a safeguard of the motor market in whatever Brexit deal is agreed.

The latest data marks the third consecutive month of decline in car manufacturing, with production for the UK dropping 39 per cent, while cars built for export fell by 3.8 per cent, and accounted for 82 per cent of total output.

Production has decreased by 5 per cent for the year so far, compared with this time last year. The SMMT said exports are still shoring up demand - while just 194,887 cars were built for the domestic market in the first eight months of the year (down 19 per cent on 2017), almost 850,000 were shipped abroad.

Mike Hawes, the SMMT’s chief executive, said: “The quieter summer months are often subject to fluctuations due to the variable timing and duration of annual maintenance and re-tooling shutdowns. This instability was exacerbated in August, with the industry racing to recertify entire model ranges to meet tougher testing standards in force on 1 September.

“With exports, the majority to the EU, continuing to drive demand, it underscores the importance of a Brexit agreement to safeguard this trade; for our sector, ‘no deal’ is not an option.”

The SMMT has previously said that a no-deal Brexit must be ruled out because of the threat it poses to the UK motor industry.

Figures compiled by the SMMT show that a cliff-edge Brexit could mean at least £5bn in tariffs.

However, the organisation said, this would be just the tip of the iceberg for the sector, as these levies could push the cost of UK-built cars sold in the EU up by an average of £2,700, “affecting demand, profitability and jobs”.

Earlier this month, Honda said a no-deal scenario would cost it tens of millions of pounds, while BMW said it would move a planned shutdown of its Mini plant in Oxford forward to coincide with the beginning of Brexit in order to minimise the risk of disruption.

Meanwhile, Jaguar Land Rover has moved workers at its Castle Bromwich plant to a three-day week because of “continuing headwinds impacting the car industry”. The company’s chief executive, Ralf Speth, has warned that tens of thousands of jobs in the UK motor industry are at risk if a no-deal Brexit goes ahead.

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