The shortage of semiconductors has dealt a blow to car production in the UK, with fewer than 68,000 cars leaving factories in January, as per data made available by the Society of Motor Manufacturers and Traders (SMMT). According to SMMT, the process of some popular models changing over to electric versions is also contributing to the reduced output.
The number is the lowest for the month since 2009 and almost 20% lower than the corresponding month in the previous year. In terms of impact, production for domestic markets fell by 30.8% while the reduction for overseas markets was 17.5%.
UK’s car production is export-oriented, with 8 out of every 10 produced heading out of the country. The biggest markets for their cars are the EU with 59.1%, China with 10.4%, and the US with 10% shares of the pie respectively.
According to Mike Hawes, SMMT chief executive: “It’s another torrid start to the year as global supply issues and structural changes squeeze output while model changes impact production scheduling. The UK automotive manufacturing industry is, however, fundamentally strong, and recent investment announcements are testament to the potential for growth, not least in terms of rising electric vehicle (EV) production.”
Going up by a third, however, was the production of battery-electric vehicles. Every eleventh unit rolling off assembly lines was a zero-emission vehicle. If one includes hybrids and plugin hybrids, more than a quarter of the output was in the form of EVs.
Other headwinds also loom for the industry, such as the cost of living, and inflation that is breaking records, as warned by Richard Peberdy, the head of automotive for KPMG. He said: “The start of 2022 has certainly provided car makers with more confidence than this time last year in the industry’s ability to avoid paused production lines, closed showrooms and staff isolating. But they will be pondering whether the cost-of-living squeeze, which includes rising fuel prices and energy costs, begins to slow the demand that currently outpaces supply.”
SMMT estimates that the full-year output of cars in the UK will be 979,000 for 2022, an increase of 14.4% over the previous year.