British car manufacturing output fell by more than a fifth in the first half of 2019, with a 15.2% decline in June marking the 13th consecutive month of negative growth, according to the Society of Motor Manufacturers and Traders.
Some 666,521 cars rolled off production lines in the first six months, a year-on-year loss of 168,052 units due largely to falling demand in key markets, including the UK, exacerbated by factory shutdowns pulled forward in anticipation of the March Brexit deadline.
In June, output for the UK rose by 2,791 units following an anomalous 47.2% decline in the same month last year when preparation for the new WLTP emissions test impacted volumes. The underlying trend, however, remains downward, with year-to-date production for the domestic market down 16.4%.
Meanwhile, the number of cars built for export fell by 19.8% in June and by 21.0% in the first half of the year, with just over half a million units shipped overseas given softening of key overseas markets and global trade tensions.
Exports to the sector’s top global markets fell by double digits, with the US down 12.9%, China down 53.1%, Japan 10.5% and Turkey 93.0%. Demand in the UK’s biggest market, the EU, also fell, by 15.6%. However, the EU still accounts for 57% of all UK car exports – the highest first half dependence since 2016.
The news comes as new SMMT research reveals the substantial cost to industry of ‘no deal’ Brexit preparations. At least £330 million has already been spent by the sector on contingency plans.
Most major UK manufacturers have tied up working capital stockpiling materials and components, securing warehousing capacity and investing in new logistics solutions, additional insurance and training in new customs procedures.
Significantly, many manufacturers have moved annual plant shutdowns from the summer to April, a measure which cannot be repeated for the proposed October departure date.
Meanwhile, latest figures show inward investment into the sector effectively stopped in the first half of the year. In the period January-June, newly pledged investment was down more than 70% to £90 million, contrasting with the average annual investment figure of £2.7 billion over the previous seven years.
While the welcome announcement by Jaguar Land Rover earlier this month was exceptional good news, this is something of an outlier as the vast majority of manufacturers have suspended plant and product spending in the UK amid ongoing uncertainty.