Production declined by 19.6% in November, which is biggest year-on-year drop since 2008
Britain’s car manufacturing output fell by almost a fifth in November, as Brexit worries and weakening demand in key markets affected the industry.
Car manufacturing declined by 19.6% in November compared to the same month in 2017, a steeper decline than the 10% year-on-year fall that occurred in October, according to industry body the Society of Motor Manufacturers and Traders (SMMT).
It was the biggest year-on-year fall in a November since the financial crisis in 2008, when output fell by more than 32% as the British economy contracted.
Production has fallen for six months in a row, and year-to-date output is more than 8% lower in the first 11 months of 2018, compared to 2017. There were 1.44m cars produced by British factories up to November – a decline of just over 129,000 on last year.
The car industry, which exports the majority of its vehicles, is struggling on multiple fronts as a strong run of global demand growth appears to slow, while consumer demand for big-ticket items in the home UK market has been dragged back by Brexit uncertainty.
Mike Hawes, the SMMT’s chief executive, said: “It’s very concerning to see demand for UK-built cars decline in November, with output seriously impacted by falling business and consumer confidence in the UK allied to weakening export markets.”
Production for the UK market continued to fall, down 1.9% year-on-year in November and down 16.8% in the year to date. In the same month, new UK car sales fell by 3%, according to earlier SMMT figures.
As well as the impact of uncertainty on British consumer demand, companies across the manufacturing sector have issued increasingly anxious warnings that delays to imports caused by a no-deal Brexit could have disastrous consequences.
The major factories in the British car industry, many of which are foreign-owned, are reliant on the “just in time” arrival of components, which have crossed the Channel multiple times and would suffer severe financial impacts if there are holdups at customs. The SMMT predicts £4.5bn in tariff costs if UK-EU trade reverts to World Trade Organisation terms.
Hawes said: “Thousands of jobs in British car factories and supply chains depend on free and frictionless trade with the EU. If the country falls off a cliff-edge next March the consequences would be devastating.”
The industry is also under pressure from weakening demand in key export markets such as China, where analysts fear car sales could fall for the first time in almost 30 years. Eight in every 10 cars produced in the UK are destined for export but production for overseas markets fell by 22.8% in November compared to last year, the SMMT said.
Weakening export demand has already impacted British factories, with Tata’s Jaguar Land Rover expected to outline as many as 5,000 job cuts in the new year amid falling Chinese sales.
As well as weakening global growth, car sales have also been hit by an increasingly tough stance on diesel air pollution in European cities, as well as fears over trade disputes pursued by the US president, Donald Trump.