UK car production plunge highlights recovery challenge ahead

Following the news from the Society of Motor Manufacturers and Traders (SMMT) that UK car manufacturing plunged by 48.2% in June;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“While the June data marked an improvement on April and May, total UK car output for the first half of the year (down 42.8%) was the lowest first six months for car production since 1954.

“Moreover, job losses across the UK’s automotive industry are mounting – estimated at over 11,000 announced so far – with the whole sector facing serious recovery challenges ahead.

“UK car output this year was set to be around two million but will turn out at well under half that number.

“Against that background, it is unsurprising that companies in the sector are becoming increasingly concerned over uncertainty surrounding prospects for an EU-UK free trade agreement (FTA) when the Brexit transition period ends at the end of the year.

“Global demand for cars remains far below normal levels and GlobalData forecasts that the hit to the global automotive market this year will be greater than in the 2007/08 financial crisis. Our base case COVID-19 light vehicle sales scenario forecasts a fall of 17% on 2019 to 73.9 million units sold, globally.

“Such a dent to demand creates huge pressures across the industry world-wide and Britain’s export orientated auto sector can’t escape that.

“Moreover, even while first wave COVID-19 infection peaks have been passed, the COVID-19 pandemic is far from over and fresh outbreaks can disrupt demand as well as manufacturing activity anywhere along the global automotive manufacturing supply chain.”

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