The UK’s car factories’ output rose by 34 percent year-on-year in August, marking four consecutive months of growth. That’s according to new figures from the Society of Motor Manufacturers and Traders (SMMT), which has warned that rising costs may impact the sector’s competitiveness in future.
According to the data, UK factories built just over 39,000 new cars in August, up from 29,000 during the same month last year. That 34-percent increase marks four months of consecutive growth for the industry, but it’s relative to a “dismal” August 2021 in which production stoppages and shutdowns caused by the global chip shortage saw volumes plummet.
As a result, even August’s increased level was still 45.9 percent below pre-pandemic August 2019’s level of 92,158 units. And between January and August this year, output is down by 13.3 percent compared with the same eight months of 2021.
During the first two-thirds of 2022, just over 511,000 new cars have been produced on UK shores, down from just under 590,000 during the same period in 2021. That reduction is largely down to an 18-percent reduction in the number of vehicles built for export, which has seen exports’ share of the market down from 83.2 percent to 78.7 percent.
The SMMT has warned that rising energy costs – which it describes as the highest in Europe – will impact the UK’s automotive vehicle and component manufacturers. With their collective energy bill rising by more than £100 million over the last 12 months, manufacturers have now told the SMMT energy is now their largest concern.
“While another month of rising UK car production is good news, and testament to sectoral efforts to overcome supply chain shortages, it overshadows what is an extremely tough and uncertain environment for manufacturers,” said Mike Hawes, the SMMT’s chief executive. “Volumes are down dramatically and firms are having to take drastic steps to safeguard their businesses in the face of myriad challenges.
“The government’s measures announced last week to alleviate crippling energy costs provide valuable respite, but long-term action is needed to restore stability and provide the sector with a globally competitive investment framework. Reform of business rates, enhanced capital allowances, an affordable and secure supply of low carbon energy, and investment in new skills can enable this critical sector to deliver the economic growth, productivity improvements, balance of trade benefits and job security the UK sorely needs.”