UK car manufacturing falls 44% in August as industry losses reach £9.5bn

UK car manufacturing dropped 44% in August, according to the latest figures released by the Society of Motor Manufacturers and Traders (SMMT).

Weak demand from overseas markets and the continued impact of the coronavirus crisis meant just 51,039 cars rolled off production lines last month. Models destined for foreign markets accounted for 43,244 vehicles, with UK domestic production reaching 7,795 units.

These figures are in stark contrast to a strong August in 2019, where many plants continued production through the usual summer shutdown, having paused in April to account for a possible no-deal Brexit on 31 March.

Total production for 2020 is down 40.2%, with 518,092 units built - 348,821 fewer cars than in the same period last year. The shortfall represents a 9.5 billion pound (Rs 86,060 crore) loss for the UK car industry.

According to the SMMT, at least 13,500 jobs have been lost across the motoring sector this year, with a recent survey suggesting one in six jobs were at risk of redundancy once the government's current job support scheme ends.

"These are increasingly disturbing times for UK car makers and suppliers, with the coronavirus crisis weighing heavily on the sector," SMMT chief executive Mike Hawes said. "Companies are bracing for a second wave, with tighter social and business restrictions making the industry’s attempts to restart even more challenging.

"The UK industry is fundamentally strong and agile and the measures announced yesterday by the chancellor are welcome and essential, although we await more details of how they will work for all businesses and crucially large manufacturers."

The trade body has predicted that even once the pandemic has eased, a no-deal Brexit scenario could cause production volume to drop below 750,000 units by 2025, costing the European automotive industry 100 billion pound (Rs 905,900 crore) in lost trade over the next five years.

It reiterated the need for a tariff-free free trade agreement as part of the ongoing Brexit talks, which could potentially help UK car production return to pre-crisis output of 1.2 million vehicles per year by 2025.