UK car output falls 45% in April on Brexit-related shutdowns

Author: Jonathan Lopez

2019/05/30

LONDON (ICIS)--The UK’s chemicals-intensive car production fell in April 44.5% on the back of Brexit-induced manufacturing facilities shutdowns during the month, the country’s trade group for the automobile industry said on Thursday.

In April, the UK produced nearly 71,000 cars, sharply down from the 128,000 produced in the same month of 2018.

According to the Society of Motor Manufacturers and Traders (SMMT), performance in the industry year to date still shows an “underlying downward trend” and April was the 11th consecutive month of decline.

April’s slump could be related to how several car plants in the UK had planned for shutdowns in April, making contingency plans for the country’s exit from the EU, which was initially set for 29 March.

“The shift in shutdown, which cannot now be repeated for a 31 October [new Brexit] deadline, was part of a raft of costly and ongoing contingency measures, including stockpiling, rationalisation, training for new customs procedures and rerouting of logistics,” said SMMT.

“[These plans were] all designed to try to protect business when the UK leaves the customs union and single market … SMMT repeats call for urgent action to end Brexit deadlock and prevent ‘no-deal’ devastation.”

The trade group also said that year to date other international major markets – the EU, China and the US – had also posted poorer performances, when compared with the beginning of 2018, but falls elsewhere have not been as marked as in the UK.

OUTLOOK
SMMT added that “provided the UK leaves the EU with a favourable deal and substantial transition period” the decline in UK car volumes would ease by the end of the year as the summer months car manufacturers are running their plants reduce activity.

However, the trade group is forecasting a full-year decline of 10.5% for car production in the UK, compared to 2018 and warned that a no-deal Brexit could exacerbate the decline.

“Today’s [Thursday] figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers,” said the SMMT’s CEO Mike Hawes.

“Prolonged instability has done untold damage, with the fear of ‘no deal’ holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation. This is why ‘no deal’ must be taken off the table immediately and permanently.”

The automotive industry is a major global consumer of petrochemical-based materials, which account for more than a third of the raw material costs of an average vehicle.

Pictured: A UK automobile production line
Picture, graph sources: Edmund Sumner/View Pictures/REX/Shutterstock and SMMT