Car production down 41% in October as industry labels decline ‘worrying’

A global semiconductor shortage is hitting UK manufacturers and their suppliers.

Car production
Car production

Another fall in the number of cars built in the UK has been described by the industry as “extremely worrying”.

Production fell 41% in October compared to the same month a year ago, with 64,729 cars leaving factories.

The Society of Motor Manufacturers and Traders (SMMT) said it was the fourth straight month of decline and the weakest October since 1956 as firms grappled with the global shortage of semiconductors which led to production stoppages.

Production of the latest battery electric (BEV), plug-in hybrid (PHEV) and hybrid (HEV) vehicles accounted for 30% of all cars made in October.

BEV manufacturing increased by 17.5% to 8,454 units, meaning that so far this year, UK car makers have produced more than 50,000 zero-emission vehicles, exceeding the total built in the whole of the pre-pandemic 2019.

Production for domestic and overseas markets fell by 37% and 42% respectively.

More than four out of five cars built in the UK were shipped abroad, with most of these (60%) going to the EU.

Shipments to the EU fell by almost a third last month, whilst those to Japan were down 57% and by 67% to the US.

The SMMT said the latest outlook forecasts UK car and light commercial vehicle production to be below one million for the second consecutive year, but to then recover to more than one million in 2022, with the potential to reach 1.2 million in 2024.

Mike Hawes, SMMT chief executive, said: “These figures are extremely worrying and show how badly the global semiconductor shortage is hitting UK car manufacturers and their suppliers.

“Britain’s automotive sector is resilient but with Covid resurgent across some of our largest markets and global supply chains stretched and even breaking, the immediate challenges in keeping the industry operational are immense.

“Government can help the industry with measures to boost competitiveness in line with global rivals, notably in tackling high energy costs, supporting employment and training, and helping businesses whose cashflow is under pressure from these historically poor production numbers.”

Richard Peberdy, UK head of automotive at KPMG, said: “Supply chain issues, particularly due to semiconductor shortages, continue to limit production.

“Carmakers are having to prioritise models and markets, and that will continue into 2022.

“Whilst there are fewer cars leaving the factory, those that do are selling quickly and with less discounting than historically required.

“Demand continues to outpace supply, and by the time supply chain issues ease there will likely be a lot of pent-up demand to be met on forecourts.

“But for now that will still feel a long way off for a number of carmakers.”

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