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UK car production slips to lowest level since 2010

UK car manufacturing slumped to its lowest level in almost a decade last year as continued uncertainty over Brexit combined with global structural challenges to depress output for a third successive year.

Industry leaders will this week urge ministers and officials to prioritise car manufacturing in trade negotiations with the EU as new figures show production fell by 14.2% to 1.3 million vehicles, the lowest since 2010.

Domestic sales fell more than 12% to 247,000 vehicles, while exports to all major markets declined sharply, with EU27 sales down 11%, the USA 10%, China 26% and Japan 18%.

The Society of Motor Manufacturers and Traders (SMMT) described the slump in sales as “gravely concerning” and called on ministers to press for a zero-tariff trade deal with the EU to protect the industry.

Almost 55% of all cars manufactured in the UK are sold to the EU27 nations and the SMMT has estimated that 10% tariffs that would arise from a deal on World Trade Organisation terms would add £1,500 to the price of every car.


“The decline in sales is gravely concerning,” said Mike Hawes, chief executive of the SMMT.

“We still believe in this industry but there are big changes happening – the shift from diesel, electric vehicles and declining demand elsewhere, it’s not just the UK.

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“But the fundamentals of this industry remain strong, it is the uncertainty that is holding us back.”

Image: The owner of Vauxhall has cast doubt on its future making the Astra if there is not a favourable EU trade deal

The car industry is particularly vulnerable to tariffs because it relies on complex supply chains to and from Europe, as well as the size of the EU export market and the importance of aligned regulations.

Chancellor Sajid Javid has said UK manufacturers should expect “divergence” from EU regulations in order to allow the UK to exploit new markets.

Moving away from EU regulations on safety and emissions controls would be disastrous for the car industry however.

What’s behind the fall in UK car production?

Maintaining the status quo may be subject to trade-offs in other areas of negotiation.

The timetable for negotiations is extremely tight, with the UK not expecting to put its opening position before the EU until March, with the transition period that begins on Saturday running only until December 31.

Major manufacturers including Nissan and PSA, owner of Vauxhall, are watching closely for signs of the impact on the industry.

Carlos Tavares, chief executive of PSA, has said production of the new Astra will only be committed to the Ellesmere Port plant if it is economic under the terms of the UK-EU trade deal, and Nissan has warned the viability of its European centre in Sunderland rests on a favourable deal.

“The reputation of the UK as a safe, stable place to invest needs to be restored because investment has fallen off a cliff,” said Mr Hawes.

“Negotiations will affect the medium-to-long term investment decisions over the next five to ten years, but the government says uncertainty will end in a matter of months, and we hope that is the case.”

In meetings with ministers, manufacturers will also stress the importance of the car industry to regional centres and the Government’s policy priority of “levelling up” areas of the UK beyond London.


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