British car production fell to its lowest level in almost a decade last year as warnings intensified that the UK needed to “re-establish” its reputation as a place to invest.
Output fell 14 per cent to 1.3m, the worst since 2010, according to figures from the Society of Motor Manufacturers and Traders on Thursday.
The decline of diesel, falling sales to China, and production shutdowns in anticipation of Brexit all hit output, pushing exports down by 14.7 per cent and production for the home market down by 12.3 per cent.
Mike Hawes, SMMT chief executive, said the “jury is out” on the long-term survival of the UK car industry, adding that Britain’s reputation had been “damaged” by the three-year tumult that followed the Brexit vote in 2016, which has seen investment into the sector collapse.
Investment into the industry was £1.1bn last year, significantly higher than in the previous two years, but skewed by the £1bn investment of Jaguar Land Rover at its Castle Bromwich plant to allow it to make electric vehicles. The total is also significantly lower than the £2.75bn average investment over the past seven years, he added.
“The reputation of the UK has to be re-established,” Mr Hawes said. “Reputations are hard gained over many years and easily lost. The UK has been damaged, we don’t know if that is permanent or not”.
Companies such as Vauxhall owner PSA, Mini owner BMW and Nissan have warned that future investment in the UK is dependent on clarity about the long-term trading relationship with Europe.
Four out of five UK-made cars are exported, with half going to the EU and two-thirds to nations with an EU trade deal. Additionally, carmakers rely on the EU for a significant number of parts.
Britain became more reliant on EU sales last year, as exports to significant markets such as China and Japan fell sharply, the SMMT said.
After Friday, when the UK leaves the EU, cars will still be able to be sold to Europe without tariffs or checks, as part of the transition deal, during which Britain aims to strike a trade deal with Brussels.
Mr Hawes said that the industry wanted a trade deal with the EU that allowed “tariff-free and quota-free” access to the market. Agreements with the US or other markets were second to Europe in the industry’s lists of concerns, he added.
“The fall of UK car manufacturing to its lowest level in almost a decade is of grave concern. Every country in the world wants a successful automotive sector as it is a driver of trade, productivity and jobs,” Mr Hawes said.
“Given the uncertainty the sector has experienced, it is essential we re-establish our global competitiveness and that starts with an ambitious free trade agreement with Europe, one that guarantees all automotive products can be bought and sold without tariffs or additional burdens.”
Source: Economy - ft.com
