UK car production falls to 65-year low

Car production fell 40% in the UK last month as manufacturers grapple with semiconductor shortages due to disruptions caused by the Covid pandemic.

It was the fourth consecutive month of decline and contributed to October’s weakest output since 1956, according to the Association of Motor Manufacturers and Traders (SMMT).

Mike Hawes, the organisation’s chief executive, said: “These numbers are extremely worrying and show how global semiconductor shortages are having a severe impact on UK car manufacturers and other major manufacturers. their suppliers”.

He described the automakers as “resilient” but said they were facing a range of challenges.

“With the resurgence of Covid in some of our largest markets and global supply chains stretched and even broken, the immediate challenges in keeping the industry afloat are immense. .”

The industry is calling for support from the government to help ease the burden and improve the competitiveness of companies with foreign rivals.

Those measures could include “addressing high energy costs, supporting employment and training, and helping businesses whose cash flow is under pressure,” Hawes added.

According to the SMMT, factories shipped 64,729 vehicles last month, down 41.4% from a year ago, at “historically poor production numbers”.

Weak output has been exacerbated by to close Honda’s Swindon plant in July. The factory used to produce 160,000 Civics per year.

While total production fell markedly, consumer demand for greener cars was reflected in the combination of output. The number of new battery-powered electric cars grew 17.5% to 8,454 units in October, and production of the latest batteries, plug-in hybrids and hybrids accounted for nearly 31% of total cars produced for the month. British carmakers have produced around 50,000 zero-emissions vehicles this year, exceeding the total produced in 2019, before the pandemic hit, the SMMT said.

Automakers have been grappling with severe microchip shortages as semiconductor makers shift gears during the pandemic to meet demand for consumer electronics. The average new car needs 1,500 chips, from those in fuel pressure sensors to digital speedometers and navigation displays.

Auto companies are scrambling to get hold of more chips after last year reduced orders in response to Covid, which saw car use drop dramatically. However, they have been hit hard by skyrocketing demand for personal computers, smartphones and other devices, as well as restrictions on expansion among chipmakers.

Analysts at JP Morgan Chase believe the global shortage will last through 2022, likely to ease in the second half of the year but will only return to a level of production in balance with demand by 2023.

The latest SMMT figures show that this year’s output is nearly 3% lower than in 2020, at 721,505 vehicles. This organization is the trade body of auto manufacturers, collectively employing 155,000 direct production people. Cars account for 11% of UK exports.

SMMT believes factories are on track in 2021 to produce less than a million vehicles for the second year in a row, before falling back to one million next year and rising to a potential 1.2 million next year. 2024.

In October, eight out of every 10 cars made in the UK were shipped overseas. About 60% have gone to the EU, with business backed by an agreement signed last year allowing auto trade with Europe to be duty-free.

Total production for the UK market fell by 38%; New cars going abroad decreased by 42%.

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