Car production slumped by a third in 2020 to lowest output in 36 YEARS

Car making in the UK fell by almost a third to less than 1 million vehicles in 2020 – the biggest year-on-year plunge since the financial crisis and the lowest total output since 1984, new figures have revealed today.

Industry bosses said around 10,000 jobs in the sector had been lost so far, and predict more could follow as businesses declare further redundancies and the furlough scheme ends.

Production fell by 29.3 per cent compared to the previous year, down to 920,928 cars. The loss of 382,207 vehicles came at cost of £10.5billion to the sector.

The significant decline in car manufacturing last year was predominantly as a result of the coronavirus crisis and combined with uncertainty for most of 2020 about a Brexit trade deal.

UK car makers hit 36-year low: Production of new models slipped to 920,928 units in 2020 – the lowest annual manufacturing figure since 1984

And with Honda Swindon -the fifth biggest car maker in the UK making almost 70,000 vehicles last year – due to close in 2021 and other factories potentially at risk – including Vauxhall’s Ellesmere Port plant – the chances of outputs exceeding 1,000,000 units this year could be hampered.

The SMMT confirmed on Thursday that a fall in car production of 2.3 per cent in December rounded off a ‘dreadful year’ for the sector.

Mike Hawes, SMMT chief executive, estimated that ‘declared’ job losses by car makers and firms in the supply chain were around 10,000, but warned that figure could rise in the coming months.

He said manufacturing operations were ‘severely disrupted’ throughout 2020, with lockdowns and social distancing measures restricting factory output, Brexit uncertainty continuing until Christmas Eve – when the UK ‘crucially avoided a no-deal scenario’ – and depressed overseas demand all taking a toll on the sector.

Despite the impact on trade of the global pandemic, more than eight in 10 of all cars – accounting for 749,038 in total – made in the UK were shipped overseas, with the EU remaining the biggest export destination, taking a 53.5 per cent share of all motors built here.

Combined production of battery electric (BEV), plug-hybrid (PHEV) and hybrid vehicles (HEV) increased to 18.8 per cent of all cars made in this country, up from 14.8 per cent a year before.

Just under 173,000 alternatively-fuelled vehicles were built last year, with four out of five exported, the figures show.

The Covid pandemic has had a huge impact on car makers. As well as factories being shut for months from the end of March, sites have been unable to return to full production due to requirements for social distancing

Figures released on Thursday morning confirmed that a fall in car production of 2.3% in December had rounded off a ‘dreadful year’ for the sector

Bosses described 2020 as a ‘very challenging year’, but he said there was optimism for 2021 because of the coronavirus vaccine, more clarity on technology and the last-ditch Brexit trade deal, even though it left exporters facing some extra costs

The last time car production fell by a magnitude of around 30% was in the height of the financial crisis in 2009, records show

More than 8 in 10 cars built in Britain are exported, and more than half are sent to EU countries, records show

Mr Hawes described 2020 as a ‘very challenging year’, but he said there was optimism for 2021 because of the coronavirus vaccine, more clarity on technology and the benefit of the last-ditch Brexit trade deal, even though it left exporters facing some extra costs.

That said, vehicle manufacturing could suffer more blows this year, with concerns growing for some production sites across the country.

Honda’s Swindon factory, which produces the Civic hatchback, will close for good in the summer – as confirmed by the Japanese company a year ago.

And, more recently, bosses at Vauxhall’s new parent group, Stellantis, stressed that the Ellesmere Port facility’s future is also not secure.

Speaking earlier this month, Carlos Tavares – boss of the newly merged brand combining Groupe PSA and FCA Automobiles – said the fate of the company’s Astra-making plant in the North West will be decided ‘within weeks’.

In a worst-case scenario, this could wipe over 100,000 new cars off the books a year, based on last year’s 36-year low outputs.

Honda Swindon produced 69,366 vehicles last year, almost 40,000 fewer than in 2019

The Swindon plant is due to close in July, with production of the Civic away from the UK

Bosses at Vauxhall have recently said that the future of the Ellesmere Port factory – where the Astra is built – will be decided ‘within weeks’

Reports of a surge in positive Covid cases at Jaguar Land Rover’s Solihull plant in recent weeks – which has required the redeployment of workers from the Castle Bromwich factory – is already likely to be impacting production outputs in January.

Commenting on the slump in manufacturing, Mike Hawes said: ‘These figures, the worst in a generation, reflect the devastating impact of the pandemic on UK automotive production, with Covid lockdowns depressing demand, shuttering plants and threatening lives and livelihoods.

‘The industry faces 2021 with more optimism, however with a vaccine being rolled out and clarity on how we trade with Europe, which remains by far our biggest market.

‘The immediate challenge is to adapt to the new conditions, to overcome the additional customs burdens and regain our global competitiveness while delivering zero emission transport.’

Andrew Burn, head of automotive at KPMG, says he has a less optimistic outlook for 2021 figures.

He told said: ‘Given the ongoing sales levels and with social distancing being here to stay for some time, it is likely that this volume will be lost forever.

“My concern now is that overlaying on top of these issues at present is the impact of getting to grips with the rules of origin for parts and the latest lockdown.

‘Arguably the next couple of months could be the hardest for the sector as this will be the first quarter where we have had a lockdown in the run up to a number plate change.’

Jaguar Land Rover retained its status of the UK’s biggest car maker, though outputs fell by almost 37% in 2020

JLR still UK’s biggest car maker and Nissan Qashqai is most popular export
The production figures show that Jaguar Land Rover retained its crown as the UK’s biggest car maker in 2020 – though an output of 243,908 vehicles across its three manufacturing sites was 37 per cent lower than production in the 12 months prior.

Mini Oxford posted the most stable results, though assembly lines completed 21 per cent fewer new cars in 2020 than they did the year previous.

The SMMT also confirmed that Nissan’s Qashqai was the car produced in highest volumes for the export market.

Independent forecasts say UK car production will partly recover in 2021 to 1 million, but Mr Hawes said much will depend on the continued impact of the virus, the speed with which showrooms can reopen, and how quickly manufacturers can come to terms with new trading arrangements with the EU, which he described as ‘much more complicated’.

He hoped today’s production figures would reflect the ‘lowest ebb’, but added that significant investment would be needed to return to the figure of 1.7 million reported in 2016.