UK automotive output falls to 65-year low in 2021

MADRID (ICIS)–UK car production fell in 2021 to its lowest level since 1956, as the semiconductor global shortage and supply chain woes crippled the sector, the country’s Society of Motor Manufacturers and Traders (SMMT) said this week.

The petrochemicals-intensive automotive industry produced nearly 860,000 units in 2021, down 7% compared with 2020.

The UK’s car output was 34% below pre-pandemic in 2021.

“The shortage of semiconductors, a critical component in modern car manufacturing, was the principal cause of the decline [in 2021 year on year], with factories having to reduce or even pause production while awaiting parts whose supply has been heavily constrained by the global pandemic,” said the SMMT.

More directly linked to the pandemic, the trade group said car manufacturers had also wrestled with staff shortages arising from the need to self-isolate as well as depressed demand, with car showrooms closed for months due to lockdowns.

The UK went through a national lockdown in the first quarter of 2021 to contain the spread of the coronavirus Alpha variant first detected there in late 2020.

There were also non-COVID-19 issues behind this fall, most notably the closure of a major UK car plant in July, which accounted for around a quarter of the annual decline.

The trade group found some positives in electric vehicles (EVs), however, where output rose sharply year on year and represented more than a quarter of the total.

“UK car factories produced a record number of battery electric (BEV), plug-in hybrid (PHEV) and hybrid electric vehicles (HEV), turning out almost a quarter of a million (224,011) of these zero and ultra-low emission vehicles, representing more than one-in-four (26.1%) of all cars made,” it said.

More than half of cars produced in the UK during 2021 were exported to the 27-country EU “despite frictions and costs arising” due to the UK’s withdrawal from the bloc.

“While automotive businesses were as well prepared as they could be, an SMMT member survey in April revealed some nine-in-ten (91%) firms were spending more time and resource managing UK/EU trade than in 2020,” said the trade group.

“Despite this miserable year, there is optimism. With Brexit uncertainty largely overcome with the TCA deal [trade deal with the EU], investments have been unleashed, most of which will help transform the sector to its zero-emission future,” said SMMT CEO Mike Hawes.

“This is a vote of global confidence in the UK but must be matched by a commitment to our long-term competitiveness; support for the supply chain in overcoming parts shortages, help with skills and training and, most urgently, measures to mitigate the escalating energy costs which are threatening viability.”

The SMMT expects output to rise by nearly 20% in 2022, year on year, to just over 1m units, still lower than pre-pandemic.

––

Front page picture: A car factory in the UK; archive image
Source: SMMT