Car Production Falls To Lowest Level For 65 years

Car production in the UK last year fell to its lowest level since 1956, according to figures from the Society of Motor Manufacturers and Traders.

The SMMT said the figures were dismal, largely thanks to a global microchip shortage and disruption caused by the coronavirus pandemic.

It said there was optimism for the future, with the announcement of new investment worth nearly £5bn.

But it warned high energy costs could be a challenge for carmakers this year.

Hopes that car production would recover in 2021 were firmly dashed. According to the SMMT's figures, just under 860,000 new cars left UK factories last year.

That was even fewer than in 2020, when the first wave of Covid and the associated lockdowns forced several factories to close.

Production last year was 6.7% lower than in 2020 - and a full 34% below its pre-pandemic level.


Chip shortage

The main reason for the decline, the SMMT said, was a severe shortage of semiconductors, or computer chips.

A modern car has complex electronics and can use between 1,500 and 3,000 chips to operate items such as engine management systems, emissions controls, safety devices and navigation systems.

But there were other factors affecting production too. These included widespread staff absences as workers were forced to go into isolation, and the impact of the closure of Honda's factory in Swindon.

The SMMT's chief executive Mike Hawes admitted it had been "a dismal year, there's no hiding it".

But he suggested that "despite this miserable year there is optimism", largely because of the announcement of £4.9bn in planned new investments, many of them in electric vehicles or technology.

These, he said, had been triggered by the signing of a Brexit deal with the EU, which had provided "a real shot in the arm", following five years of declining investment.

But he added the UK was "still playing catch-up" after a long period of Brexit-related uncertainty.

"The industry did everything it could to be prepared [for new post-Brexit trading arrangements], and largely that has been relatively smooth," he told the BBC's Today programme.

"It has incurred additional costs though, because whilst we were able to benefit from the deal we have with the EU, which avoids tariffs, it doesn't avoid other tariff barriers and additional administration which has required additional people and additional costs to everyone, whether you're exporting or importing."