UK car production HALVED in June despite most factories being open – and 11,000 sector jobs have been cut in the first six months of 2020

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UK car makers continue to endure a torrid period with production of new vehicles halving in June, with the ongoing toll of the coronavirus on the sector already costing 11,000 jobs in 2020, the trade body said today.

Vehicles manufacturing is down 43 per cent in the first six months of the year, with the crisis still restricting some factories from reopening. The UK is now on course to produce just over 880,000 new cars this year – a decline of a third compared to 2019 and the lowest output since 1957.

Society of Motor Manufacturers and Traders boss, Mike Hawes, described the latest manufacturing report as ‘grim reading’ and said the long-term future of the UK car-making industry now ‘depends on securing a good deal’ as part of Brexit negotiations. Official stats released on Thursday show that just 56,594 new cars were built in UK vehicle plants last month.

Output is down from 119,226 units in June 2019 – a decline of 48.2 per cent.That’s despite most car manufacturing sites in the country operating throughout the month, with some returning as early as 4 May.

a screenshot of a cell phone: Official figures released by the SMMT today show that just 56,594 cars were built in UK factories last month. In June 2019, the output was 109,226© Provided by This Is Money Official figures released by the SMMT today show that just 56,594 cars were built in UK factories last month. In June 2019, the output was 109,226 .Rolls-Royce was the first brand to return, shortly followed by Aston Martin and Bentley at the beginning of May, while Jaguar Land Rover restarted its Solihull vehicle plant and Wolverhampton engine factory simultaneously on 18 May.

However, some manufacturers are still yet to raise their shutters.

JLR – which is Britain’s biggest car producer – hasn’t restart operations at some of its other plants, including Castle Bromwich where DHL supply staff have been told they will not be returning as part of 2,200 job cuts across the business. Nissan’s Sunderland site – the largest single car production facility in the country – only restarted its assembly lines on 9 June while French bosses of Vauxhall have recently confirmed that Astra production at the Ellesmere Port factory will resume from 17 August – a full five months after it closed at the start of the pandemic.

The SMMT said slowed production was also caused by the limitations presented by factories having to implement strict social-distancing measures. This includes smaller workforces, regular and extended machinery clean-down times and spaced-out assembly lines, all of which have caused a drag on productivity. Weak demand across global markets was also cited as restricting output.

Manufacturing for the domestic market was down by 63.8 per cent, though – more worryingly – production for export fell by a substantial 45 per cent. The UK’s first car-battery gigafactory is scheduled to open in 2023, potentially providing hundreds of new jobs in Wales.

Manufacturer Britishvolt this week announced that the renowned Italian design house Pininfarina will build the UK’s first large-scale battery gigaplant at the former RAF base of Bro Tathan – the same location of Aston Martin’s newest factory where the DBX SUV is being built. Pininfarina is most recognised for iconic car design – penning the likes of the Ferrari Daytona and Testarossa – but has more recently expanded into the field of architecture.

A 2.7-million-square-foot plant is to be drawn up. It will have an annual lithium-ion battery production capacity of up to 35GWh, putting it on a par with Tesla’s Gigafactory in Nevada, USA, says Britishvolt bosses. No details on investment for the plant have been announced, but it will include government funding.

Orral Nadjari, founder at Britishvolt, said: ‘We are honoured to collaborate with world-renowned design powerhouse Pininfarina, to create our landmark gigaplant. ‘Britishvolt’s aim to become the world’s first zero carbon battery manufacturer aligns perfectly with Pininfarina’s expertise in creating green, high tech and innovative environments.

‘With carefully selected sustainable materials that take into account the entire building’s life cycle, Pininfarina’s appreciation of social impact is what drew us to this partnership. ‘Their balance between pioneering design and understanding of local culture, is one Britishvolt is proud to take forward.’

Professional mechanic hand providing car repair and maintenance service in auto garage. Car service business concept.Professional mechanic hand providing car repair and maintenance service in auto garage. Car service business concept. Silvio Pietro Angori, CEO at Pininfarina, added: ‘We are proud to collaborate with Britishvolt on such an ambitious project, thus contributing towards creating the UK’s largest battery manufacturing facility, and advancing the evolution of e-mobility.

‘Our focus has always been on combining timeless design with social and environmental sustainability, both in automotive design and architecture. Sustainable design is no longer an option to consider down the line, it’s a necessary commitment to create social and economic value for future generations.’

The latter figures is a huge hammer blow to the sector, with nine in 10 new cars produced in the UK being built to order for overseas markets – many of which had their coronavirus lockdowns eased ahead England. While June marked a vast improvement on April and May, when only a combined 5,511 cars were built, the performance has officially rounded off the worst first six monthsof a year for UK car production since 1954.

Just 381,357 motors have been built since January, a decline of 42.8 per cent, representing a loss of 285,164 units. As a consequence of the crisis, at least 11,349 job cuts have already been announced across the industry, including manufacturing, supply chain and retail, the SMMT said.

Furthermore, new analysis suggests car production losses could total 1.46 million units by 2025 – worth just over £40 billion – if no free trade agreement is in place by the end of 2020, forcing the sector to trade on World Trade Organisation terms with full tariffs applied – pushing up the price of an average car imported into the UK from EU nations by £1,500.

Mr Hawes said it is now of ‘critical importance’ for the government to strike an EU-UK free-trade agreement for the sector. The SMMT ceo added: ‘These figures are yet more grim reading for the industry and its workforce, and reveal the difficulties all automotive businesses face as they try to restart while tackling sectoral challenges like no other.

‘Recovery is difficult for all companies, but automotive is unique in facing immense technological shifts, business uncertainty and a fundamental change to trading conditions while dealing with coronavirus. ‘Our factories were once set to make two million cars in 2020 but could now produce less than half that number, a result of the devastating effects of the pandemic on top of already challenging market conditions and years of Brexit uncertainty.

‘This industry has demonstrated its inherent competitiveness and global excellence over the past decade. Its long-term future now depends on securing a good deal and a long-term strategy that supports an industry on which so many thousands of jobs across the country depend.’

The latest independent production outlook commissioned by SMMT, and also released today, now expects just over 880,000 cars to be produced in the UK this year – down by a third on 2019 outputs and 30 per cent less than anticipated in January, ahead of the pandemic striking the economy.

If the trade body’s estimations are correct, the UK automotive sector would have its lowest total manufacturing output since 1957. The analysis also suggests that without a positive trade agreement with the EU, and the industry trading on WTO terms with 10 per cent tariffs, output could stay around the 800,000 mark or less to 2025.

If an tariff-free agreement can be found, car volumes would recover to pre-crisis levels of 1.2 million units within the next few years and the potential for further long-term growth after that, it claimed.

Commenting on the June results and estimated total UK vehicle production in 2020, Peter Barnes, head of automotive at global legal business, DWF, said: ‘The coronavirus pandemic caps a perfect storm for the UK car industry which has been facing falling investments and uncertainty since the 2016 vote to leave the EU.

‘The future now depends on securing a good deal. Positive news in respect of treatments and vaccines for coronavirus will assist a quicker recovery from a global economic downturn, and it will no doubt boost consumer confidence and purchasing power when they are available.’

Reference: This is Money: Rob Hull For 22 hrs ago: 30th July 2020