Published: Thu, August 02, 2018
Money | By Ralph Mccoy

‘Perfect storm’ sees United Kingdom demand for British-made cars plummet

‘Perfect storm’ sees United Kingdom demand for British-made cars plummet

Output from Britain's automotive manufacturers fell by 5.5 per cent in June, with 128,799 cars rolling off production lines, according to figures released by the Society of Motor Manufacturers and Traders (SMMT).

"June's results demonstrate the risks of judging automotive performance one month in isolation, with numerous and varied factors creating a ideal storm for home market output", said SMMT chief executive Mike Hawes.

The warning was made more explicit as fears over disruption to cross-border trade were highlighted by new figures showing that nine out of ten cars built in the United Kingdom last month were for the foreign export market.

British vehicle output in the first six months of 2018 fell by an annual 3.3% to 834,402, with disappointing domestic demand cancelling out strong exports, SMMT said.

Hawes said this showed the importance of striking a deal with the European Union, the destination for 53% of United Kingdom vehicle exports, and warned that a lack of clarity on Brexit had left the industry struggling to prepare for the departure date in March 2019.

A no-deal Brexit would seriously harm the auto industry in Britain and the European Union by lifting costs and sowing chaos for automakers and consumers alike, the head of Britain's vehicle industry cautioned on Tuesday. If we have no deal, there is no transition, there is no implementation period, that would kick in less than eight months away.

"No one would profess to being Brexit-ready because there are too many variables in there", he said.

"The automotive industry has made it clear that for its long term health it wants the United Kingdom to commit to continued membership of the customs union and access to the single market".

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Exports continue to drive volumes throughout 2018, with overseas orders broadly stable, down 0.8 per cent in the first six months. Leading firms in the industry have said anxiety about a trade deal has already choked off investment, while Jaguar Land Rover said a no-deal Brexit could f orce them to pull out of the UK. Over 87 per cent of the cars registered by British buyers in the first six months of the year came from overseas plants, and more than two thirds (69.1 per cent) from the EU.

The export market's performance is helping auto makers out, as there has been a big decline in production for the domestic United Kingdom market - down by 47.2 per cent in June.

He added that vehicle plants would do "everything they can" to prevent lines stopping.

It also insisted that sounding the death of diesel was "premature" but that action by politicians had "sowed the seeds of confusion" that had hastened its demise by unfairly denting consumer confidence.

Although a no-deal Brexit threatens the agreement, the latest proposals put forward by the British government "are a step in the right direction", he said.

"We now look to negotiators on both sides to recognise the needs of the whole European automotive industry, which combined employs more than 12m people".

He said any disruption to this due to Brexit "risks undermining" this.

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