UK car production slumps to lowest June level in almost 70 years
Manufacturers hit by shortages of both staff and semiconductors as a result of the pandemic
Last modified on Wed 28 Jul 2021 19.03 EDT
The number of cars rolling off UK production lines last month slumped to the lowest June level in almost 70 years, as car manufacturers were hit by shortages of both staff and semiconductors.
The Society of Motor Manufacturers and Traders (SMMT) said just over 69,000 cars were produced in UK car plants last month, the lowest June total since 1953, although this excludes June 2020 when factories were slowly getting back up to speed after the first lockdown.
The global shortage in semiconductor chips as a result of the pandemic has hit car production, and could mean 100,000 fewer cars are built in the UK this year than previously forecast.
Every new car contains about 1,500 semiconductor chips, which are the “brain” found inside every kind of electronic device, from cars and games consoles to PCs and TVs.
“It’s a significant component that we’re in short supply of,” the SMMT’s chief executive, Mike Hawes, told journalists. “We expect this disruption to continue until the end of the year.”
Supply shortages are accompanied by ongoing staff shortages at car plants, as workers are “pinged” by the NHS app after coming into contact with someone who tests positive for Covid-19.
The SMMT has called for “urgent action” from the government, including bringing forward the target date of 16 August for exempting fully vaccinated adults from self-isolation requirements.
Just under half a million cars were produced in the UK in the first half of 2021, with the total of 498,923 units marking a slump in production of more than 38% compared with the five-year average for January to June.
More than 311,000 fewer cars were produced during the six-month period than on average, which would have been worth more than £8.5bn according to the SMMT.
The auto industry is forecast to be the year’s biggest loser as a result of the chip shortage, with analysts at Goldman Sachs estimating that up to $20bn (£14bn) will be wiped off global carmakers’ operating profits in 2021.
The shortage has already lasted for over a year, ever since manufacturers closed down their operations as the coronavirus first took hold in early 2020.
Even though production has returned to normal, consumers’ desire to buy electronic devices such as tech-heavy electric vehicles, TVs and home computers, fuelled by the pandemic, has seen chip manufacturers struggling to meet demand.
For the UK car industry, “it’s an inconsistent picture”, Hawes said. “Some manufacturers are better than others. The difficulty is seeing what that supply is going to look like.”
The June production figures round off a turbulent six months for the UK industry, as carmakers have had to deal with range of issues, including post-Brexit trading rules with Europe, the ongoing effects of the pandemic and accompanying disruption to the supply chain.
As result, the SMMT cautions that the UK could produce fewer than 1m cars in 2021, well below the future production target of between 1.2 – 1.3m.
Despite the recent announcement of long-term investments in the UK car industry from Nissan in Sunderland and by Vauxhall’s owner Stellantis at Ellesmere Port, the SMMT said UK carmakers remain in a difficult situation, with supply uncertainties expected to last into 2022.
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