PR94239

LONDON, Jan. 27, 2022 /PRNewswire=KYODO JBN/ --

- Car production falls -6.7% to 859,575 units due to multiple factors, most

Covid-related.

- UK electrified vehicle output surges, up 29.6%, to more than a quarter of

production.

- Factories turn out record number of battery electric vehicles, volumes up

72.0%.

- Grounds for optimism in 2022 with potential £4.9 billion of investment

announced and production forecast to begin recovery.

UK car production in 2021 fell -6.7% to only 859,575 units, according to

figures released today by the Society of Motor Manufacturers and Traders

(SMMT), the worst total since 1956 [1]. Output was 61,353 less than 2020, which

itself was badly affected by coronavirus lockdowns, and -34.0% below

pre-pandemic 2019 [2].

Despite this, British car factories produced a record number of battery

electric (BEV), plug-in hybrid (PHEV) and hybrid electric vehicles (HEV),

turning out almost a quarter of a million (224,011) of these zero and ultra-low

emission vehicles, representing more than one-in-four (26.1%) of all cars made.

The overall poor performance can be attributed to several factors, most of them

direct consequences of the pandemic. The shortage of semiconductors, a critical

component in modern car manufacturing, was the principal cause of the decline,

with factories having to reduce or even pause production while awaiting parts

whose supply has been heavily constrained by the global pandemic.

Manufacturers also wrestled with staff shortages arising from the need to

self-isolate and depressed demand with car showrooms closed for months due to

lockdowns and despite the success of ‘click and collect’ services. There were

also non-Covid issues behind this fall, most notably the closure of a major UK

car plant in July, which accounted for around a quarter of the annual decline.

More positively, the shift to electrified vehicle manufacture continued apace

as BEV production surged 72.0%, while hybrids rose 16.4%, as the UK industry –

like the market – transforms into a low and, ultimately, zero-carbon industry.

Global exports continued to be the foundation for UK car manufacturing, with

some eight-in-ten cars made being shipped overseas. Although annual production

for overseas markets declined -5.8% to 705,826 units, volumes for the domestic

market declined even more steeply, down -10.6% to 153,749.

The European Union remained the UK’s largest market by some considerable

distance, increasing to 55.0% of exports, from 53.5%, and representing 388,249

units (-3.0% vs 2020), despite frictions and costs arising from the new trading

arrangements. While automotive businesses were as well prepared as they could

be, an SMMT member survey in April revealed some nine-in-ten (91%) firms were

spending more time and resource managing UK/EU trade than in 2020.

Shipments to several other major global markets also fell, with the US, our

second ranked export destination, down -10.5% and Japan, our fourth largest

export market, down -36.1%. China, in third place, fared better, with exports

up 0.6% to 57,356 units, reflecting strong market conditions in the country and

demand for iconic British performance, luxury and premium car brands. Exports

to Canada, Australia and South Korea, however, declined, -5.3%, -31.1% and

-29.7% respectively.

Despite the dismal overall performance, there were significant developments

that give the industry increased confidence. Following the avoidance of ‘no

deal’ and the signing of the Trade and Cooperation Agreement (TCA), publically

announced investment for the industry reached a potential £4.9 billion in 2021,

the highest total since 2013 [3]. This included vital investment announcements

in Ellesmere Port, Halewood, Norfolk, Sunderland and Surrey.

Moreover, a significant proportion of the announced investments was in support

of electrified vehicles, with the expansion of existing facilities in the

North-East and the proposed development of a new battery gigafactory in the

West Midlands. The latter intention represents around half (£2.5 billion) of

the total investment sum publically announced in 2021. Realising such

investments will be vital as the UK automotive manufacturing sector is expected

to need at least 60 GWh of gigafactory battery capacity by 2030 if it is to

remain globally competitive as trading requirements tighten.

This investment must also be matched by a package of measures to ensure

manufacturing competitiveness across the supply chain, notably in training and

reskilling, technology transition and urgent action to address the UK’s

increasingly high energy costs.  

Mike Hawes, SMMT Chief Executive, said, “2021 was another incredibly difficult

year for UK car manufacturing, one of the worst since the Second World War

which lays bare the exposure of the sector to structural and, especially,

Covid-related impacts. Despite this miserable year, there is optimism. With

Brexit uncertainty largely overcome with the TCA deal, investments have been

unleashed, most of which will help transform the sector to its zero-emission

future. This is a vote of global confidence in the UK but must be matched by a

commitment to our long-term competitiveness; support for the supply chain in

overcoming parts shortages, help with skills and training and, most urgently,

measures to mitigate the escalating energy costs which are threatening

viability.”

The latest independent production outlook for 2022 forecasts UK car production

to increase to more than one million units, representing a 19.7% uplift on the

2021 total, despite the loss of production in Swindon. With favourable

conditions, including an end to the global chip shortage, new models coming on

stream and the avoidance of additional trade barriers, car production could

continue to climb and reach 1.1 million in 2025, with further growth beyond [4].

Notes to editors

1: 1956 UK car production at 707,594 units

2: 2019 UK car production at 1,303,135 units

3: SMMT calculations based on new, publicly announced investment decisions in

2021 covering planned commitments to fresh spend on new product, tooling,

equipment or facilities / factories for the automotive sector

4: Independent forecast by Auto Analysis November 2021 – best case scenario

About SMMT and the UK automotive industry

The Society of Motor Manufacturers and Traders (SMMT) is one of the largest and

most influential trade associations in the UK. It supports the interests of the

UK automotive industry at home and abroad, promoting the industry to

government, stakeholders and the media.

The automotive industry is a vital part of the UK economy, and integral to

supporting the delivery of the agendas for levelling up, net zero, advancing

global Britain, and the plan for growth. It contributes £60 billion turnover

and £12 billion value added to the UK economy, and invests around £3 billion

each year in R&D. With more than 155,000 people employed directly in

manufacturing and some 800,000 across the wider automotive industry, it

accounts for 11% of total UK exports with more than 150 countries importing UK

produced vehicles, generating more than £73 billion of trade.

More than 30 manufacturers build more than 70 models of vehicle in the UK,

supported by more than 2,500 component providers and some of the world's most

skilled engineers. The automotive sector also supports jobs in other key

sectors – including advertising, chemicals, finance, logistics and steel. Many

of these jobs are outside London and the South-East, with wages that are around

25% higher than the UK average.

More detail on UK automotive available in SMMT's Motor Industry Facts 2021

publication at smmt.co.uk/facts21

Broadcasters: SMMT has an ISDN studio and access to expert spokespeople, case

studies and regional representatives.

Hi-res charts available via Dropbox:

https://www.dropbox.com/sh/ggx476zta6crfi2/AAB1j8OOi-uWu2J_y0QeN6Rma?dl=0

Source: Society of Motor Manufacturers and Traders Limited (SMMT)