UK car production collapses 18% as industry warns of 'clear and present danger' from no-deal Brexit

Car companies paying additional and potentially pointless costs every day that leaving the EU with no deal remains on the table, says trade body

UK car exports have slumped by one-fifth and production has fallen for an eighth successive month, prompting industry figures to warn of a “clear and present danger” from a no-deal Brexit.

The number of cars leaving UK factories slumped 18.2 per cent to 120,600 in January compared to the same month a year ago, the industry’s trade body said.

The decline was driven by a 21.4 per cent decline in exports, which account for most of production. Output destined for the EU was down by one-fifth while car exports to China collapsed 72 per cent, the latest figures from the Society of Motor Manufacturers and Traders (SMMT) showed. Manufacturing for the UK market fell by a more modest 4.8 per cent.

It comes after Honda announced it would shut its Swindon factory in 2021 with 3,500 jobs to go. Nissan, Jaguar Land Rover and Ford have all laid out plans to cut jobs or shift production overseas in recent months, citing a variety of reasons from Brexit to falling demand for diesel cars.

“Another month of decline is a serious concern,” said Mike Hawes, SMMT chief executive. “The industry faces myriad challenges, from falling demand in key markets, to escalating global trade tensions and the need to stay at the forefront of future technology.

“But, the clear and present danger remains the threat of a no-deal Brexit, which is monopolising time and resources, undermining competitiveness.

“Every day a no-deal Brexit remains a possibility is another day automotive companies pay the price in additional and potentially pointless costs. No-deal must be taken off the table immediately and permanently.”

Almost one-third of automotive companies responding to a recent SMMT survey said they had postponed or cancelled UK investment decisions because of Brexit, with one in five having already lost business as a direct consequence.

Around one in eight were relocating operations overseas and the same proportion cutting jobs.

Rebecca Long-Bailey, shadow business secretary, said the figures highlighted the uncertainty caused the Theresa May’s “shambolic” Brexit negotiations.

“The government must end this chaos and back Labour’s credible alternative plan, including a comprehensive customs union, before it is too late for car manufacturing, the companies in its supply chain and all those who work in it,” Ms Long-Bailey said.

Stuart Apperley, director and head of UK automotive at Lloyds Bank said there were some positives for the car industry, despite the poor production figures.

“While it’s easy to be downbeat, it’s important to remember it isn’t all doom and gloom and the sector has proven resilient in the past.

“Indeed out of the gloom of 2008, the UK’s automotive sector emerged with some real winners to be found.”

Manufacturers will be looking to repeat the trick this time around with a renewed focus on growth areas such as electric vehicles, Mr Apperley said.