SMMT - UK car production down -29.3% in 2020 as coronavirus slams brakes on sector

- UK car manufacturing output falls -29.3% in 2020 to 920,928 units, the lowest total since 1984.

- Production for UK and overseas markets declines -30.4% and -29.1% but more than eight in 10 cars still head abroad.

- Latest independent outlook forecasts car output to reach one million units in 2021, but much depends on Covid recovery, market confidence and new cross-channel rules.

LONDON, Jan. 28, 2021 /PRNewswire/ -- UK car production declined -29.3% in 2020, to 920,928 units, according to the latest figures issued today by the Society of Motor Manufacturers and Traders (SMMT). December, output was down -2.3% to 71,403, with some firms affected by border closures and thus component supply issues. This rounded off a dreadful year, the worst since 1984 for UK car makers, with the pandemic chiefly responsible for the decline.^[1] Manufacturing operations were severely disrupted throughout 2020, with lockdowns and social distancing measures restricting factory output,  Brexit uncertainty continuing until Christmas Eve and depressed market demand in key export destinations.

Production for overseas buyers fell -29.1% in the year, to 749,038 units, while output for the UK also fell in double-digits, down -30.4% to 171,890. Even amid the global pandemic, exports continued to drive UK car manufacturing, however, with more than eight in 10 of all cars made shipped overseas. Reinforcing the importance of avoiding 'no deal' tariffs with Europe, the EU remained the UK's biggest export destination, taking a 53.5% share, despite volumes falling -30.8% to 400,460 units.

Elsewhere, trade with most of the UK's other key export partners declined in line with the tough market conditions resulting from the pandemic. Shipments to the US, Japan and Australia all fell, down -33.7%, -21.6% and -21.8% respectively. Exports to China, however, ended the year up 2.3%, and those to South Korea and Taiwan also rose 3.6% and 16.7% respectively as these nations travelled on different trajectories in dealing with Covid.

Despite the gloom, the UK continued to rollout battery electric (BEV), plug-hybrid (PHEV) and hybrid vehicles (HEV) to buyers at home and around the world. Combined production of these models rose to 18.8% of all cars made in Britain, up from 14.8% a year before, with BEVs increasing to a 4.5% share, up from 3.4%. All told, the UK turned out 172,857 alternatively fuelled vehicles, with 79.6% of these exported, evidence of the country's existing capability in building the vehicles essential to a Net-Zero future.  

Mike Hawes, SMMT Chief Executive, 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. We will continue to work with Government to attract investment in battery production and supply chain transformation as we transition to smart and sustainable mobility, supporting jobs and driving economic growth nationwide."

Meanwhile, the latest independent production outlook forecasts UK car production partly to recover in 2021 to one million units.^[2] Much, however, will depend on the extent of Covid measures here and abroad and the speed with which showrooms can reopen. In addition, manufacturers are coming to terms with new trading arrangements between GB and the EU, arrangements that are much more complicated than previously, despite the avoidance of 'no deal'.

With more onerous procedures to ensure customs compliance, the industry's ability to attract future investment – and increase volumes - depends on maintaining its competitiveness. 2020 saw £3.23 billion of automotive investment publicly announced for the UK, however over 80% of this amount was attributable to one company committing to a battery Gigafactory.^[3] More commitments of this nature will be essential for the future of a sector that is the country's largest exporter of goods, turns over £78.9 billion annually and employs more than 180,000 people directly with many more across retail and other indirect sectors.^[4]

Notes to editors

1. Output at lowest level since 1984 – 908,906 cars.
2. Independent production outlook by AutoAnalysis January 2021
3. SMMT calculations based on new, publically announced investment decisions in 2020 covering genuine commitments to fresh spend on new product, tooling, equipment or facilities.
4. SMMT Motor Industry Facts 2020 - https://www.smmt.co.uk/reports/smmt-motor-industry-facts-2020/ 

Hi-res charts available via Dropbox: https://www.dropbox.com/sh/egywnc6brz9csjl/AAB4UgUFvQvH_gU_RXyphPtva?dl=0

Photo: https://mma.prnewswire.com/media/1427216/UK_car_production_2020_table.jpg