Though the outlook is beginning to look more positive as production levels rise for the third month in a row and the industry shows signs of recovery, persistent issues will continue to cause turbulence in the coming months, said Lisa Watson, Director of Sales at Close Brothers Motor Finance.
“The ongoing conflict in Ukraine means the well-documented semiconductor shortage is continuing to cause headaches, although the backlog appears to be easing and delivery times are coming down as a result.
Lisa added, “Renault and Stellantis are expecting to return to normal production following their summer break, which is welcome news for retailers and customers of the brands.”
“Other issues, however, such as the Felixstowe strikes, are throwing new hurdles in front of manufacturers. Those relying on the port to ship parts and components in and out of the UK are likely to have their production lines affected.
“As demand may begin to cool due to the soaring cost of living, it is important that dealers continue to use all available market insights and data to ensure their forecourts are well stocked to meet consumer trends.”
She was speaking after UK car makers’ body, the Society of Motor Manufacturers and Traders said, “UK car production rose for the third consecutive month in July, up 8.6% to 58,043 units.
“The performance must be set in context, however, as it is compared with July 2021, which was the worst July since 1956 as car makers faced multiple issues including the global shortage of semiconductors and staff absences arising from the ‘pingdemic’ forcing some to alter summer shutdown timings to help manage the challenge.
“This July, factories turned out 4,605 additional units, a sign that component shortages may finally be beginning to ease. Output, however, still remains -46.4% below pre-pandemic levels, illustrating that full recovery is some way off.
“Production for the UK market surged 40.7% to 11,583 units with exports also up, but by a more modest 2.8%, in part reflecting the structural and model changes at play.”
Shipments continue to drive the sector, accounting for eight out of 10 cars made (80.0%), though exports to top markets the EU and US fell, down -7.3% and -22.8% respectively, while orders from China and Japan rose 54.0% and 40.1%.
Almost a third (29.9%) of all cars made in July, meanwhile, were either battery electric (BEV), plug-in hybrid (PHEV) or hybrid electric (HEV) amounting to 17,356 units, with BEV volumes doing particularly well, up 65.9%.
Despite three months of growth, year-to-date UK car production remains -16.5% below the same period in 2021, at 461,174 units, representing a shortfall of 91,187. The decline is attributable to supply chain shortages, structural changes and weak exports, which fell -21.3% to 363,223 units, with a 7.6% rise in production for the UK unable to offset these losses. 78.8% of all cars made in Britain since January have been shipped overseas, with some six in 10 of them (59.3%) into the EU.