The number of cars built in the UK slumped again year-on-year last month, as global trade tensions and concerns over the shape of Brexit and the future of diesel vehicles took their toll.
Car manufacturing fell 16.8% in September from a year ago to 127,051 vehicles, according to the Society of Motor Manufacturers and Traders (SMMT). It is the fourth month in a row that output has fallen sharply compared to the same month in 2017, with June recording the steepest drop, of 47%.
Some 25,610 fewer cars rolled off production lines than in September last year year, capping off a turbulent first nine months of 2018 for the UK car industry.
The number of cars made between January and September dropped 6.6% compared with the same period in 2017, to 1.17m. Production for the UK market slumped by nearly a fifth, while output destined for overseas markets was down 3.3%.
Apart from trade wars and growing fears of a no-deal Brexit, the trade body also blamed model changes and testing backlogs after tougher new emissions regulations came into effect on 1 September.
All cars sold in the EU are now subject to the worldwide harmonised light vehicle test procedure, measuring all regulated emissions as well as CO2 and fuel economy.
Last month also marked the worst September since 2008 for car sales. September is traditionally a bumper month as consumers rush to buy cars with new number plates.
Mike Hawes, SMMT chief executive, said: “It has been a turbulent year and the industry needs stability, something which appears elusive given the lack of resolution to Brexit negotiations.
“The UK government has recognised the importance of a deal that maintains free and frictionless trade with the EU, but it is up to all sides to deliver this to safeguard the hundreds of thousands of jobs depending on the sector.”
A survey from the Confederation of British Industry (CBI), Britain’s leading employers’ organisation, this week showed that confidence among manufacturers was falling at the fastest rate\ since the immediate aftermath of the EU referendum in June 2016. The CBI warned that the deadlocked Brexit talks had led to investment being scaled back and the sharpest fall in order books in three years.
The SMMT figures show car production for the UK market fell by 19% year-on-year in September, while the number of vehicles made for export dropped 16.2%. Exports still account for eight out of every 10 cars produced.
Stuart Apperley, head of UK automotive at Lloyds Bank Commercial Banking, said businesses throughout the car supply chain had stepped up contingency plans “for the full range of possible Brexit outcomes” in the past few weeks.
Most of the cars made in Britain are exported – more than half of them to the EU – and most British buyers get their vehicles from overseas, with about 86% of new cars being imported and 69% of vehicles coming from the EU.
Apperley also noted that demand from China had fallen, while consumers are unsure what the future will hold for diesel vehicles following Volkswagen’s ‘Dieselgate’ emissions-rigging scandal in 2015.
Apperley said: “Diesel sales have all but collapsed in the wake of prolonged uncertainty as to whether governments across the world will take a punitive approach to them in future. Add to that recent changes to subsidies on hybrid and electric vehicles as well and consumers and businesses are all having to second-guess what will happen to the value of any new car they buy.”
The SMMT chief called on the chancellor to use his budget next Monday to stimulate the market, which would help bolster manufacturing output and the economy as a whole, as well as delivering environmental goals.