UK car production rises but domestic demand slips due to bruised consumer confidence

Domestic demand fell by 2.9 per cent but that was offset by a 5 per cent increase in exports abroad

Josie Co
Business Editor
@JosieCox_London
Thursday 23 November 2017 01:02
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Total UK output for 2017 is now likely to be 1.73 million, which is below the previous SMMT estimate of around 1.8 million.
Total UK output for 2017 is now likely to be 1.73 million, which is below the previous SMMT estimate of around 1.8 million.

UK car production increased by 3.5 per cent last month largely driven by exports, the industry’s trade association said on Thursday.

The Society of Motor Manufacturers and Traders (SMMT) said that 157,056 cars rolled off production lines in October. Domestic demand fell by 2.9 per cent but that was offset by a 5 per cent increase in exports abroad. In fact, 82.1 per cent of all UK-built cars were shipped abroad in October, which was the highest proportion so far this year. The majority of those cars went to Europe.

The drop in production for the home market, marked the ninth consecutive monthly fall, which the SMMT attributed to lower business and consumer confidence, combined with confusion over government policies towards diesel.

So far this year, production for the home market has now decreased by 6.8 per cent, or almost 22,000 units. Exporters are down around 0.1 per cent for the year and overall output is down 1.6 per cent compared to the same period in 2016.

“It's encouraging to see positive growth in exports this month and a slight increase in overall output,” said Mike Hawes, chief executive of the SMMT. But he also said that it was important that confidence is restored to the new car market domestically.

The latest independent production forecast was also published on Thursday, showing that UK output for 2017 is now likely to be 1.73 million, which is below the previous SMMT estimate of around 1.8 million.

The revision is due in part to the decline in domestic demand, but also because of lower than expected production levels of certain models as some approach the end of their lifecycles.

Mr Hawes said that this was “worrying news for the sector”.

“The industry needs stability and a clear roadmap for Brexit if we are to encourage investment and arrest the decline in both the market and business confidence,” he said.

The SMMT is one of the most influential trade associations in the UK and it has been particularly vocal in its warnings on the potential impact of Brexit on the car industry.

Around 169,000 people are employed directly in auto manufacturing across the UK, and around 814,000 work in the wider industry, according to SMMT figures.

The industry accounts for around 13 per cent of total UK export of goods and more than 30 manufacturers currently build in excess of 70 models of vehicle in the UK.

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