UK car production slumped in November as manufacturers continue to struggle with a global shortage of semi-conductors.
Production fell 28.7% to 75,756 units – the fifth consecutive month of decline and the worst November performance since 1984, according to the Society of Motor Manufacturers and Traders (SMMT).
The figures also reflect the loss of output arising from the closure of a UK car factory in the summer, a situation that will impact year-on-year comparisons until July 2022.
“These are incredibly worrying figures, underscoring the severity of situation facing the automotive industry,” said Mike Hawes, SMMT CEO.
“Covid is impacting supply chains massively, causing global shortages - especially of semiconductors - which is likely to affect the sector throughout next year,” he said, adding that “with an increasingly negative economic backdrop, rising inflation and Covid resurgent home and abroad, the circumstances are the toughest in decades.”
He said maintaining cashflow, especially in the supply chain, is crucial and the government needs to provide support measures to car makers in the same way it is for other sectors.
“Despite investment going into increasing chip production, the backlog of demand for the variety of sectors and goods that require them means that supply challenges will persist in the automotive industry throughout 2022, albeit these will probably ease as the year goes on," said Richard Peberdy, UK head of automotive at KPMG.
He said "we are entering a ‘new normal’ for car manufacturing and we won’t again see the levels of over-production and discounting that we did pre-pandemic. Instead, manufacturers will focus volume on more profitable vehicles and markets."
He also believes demand will change.
"In light of sustainability concerns and hybrid working, consumers will be rethinking what they drive and how they access and pay for mobility more widely.”
Meanwhile, the SMMT data showed that in November production for both domestic and overseas markets declined, down 18.8% and 30.4% respectively, as 30,487 fewer cars rolled off factory lines.
Exports accounted for more than 80% of all cars produced last month, "reinforcing the need for smooth international trade, especially with the EU," SMMT said as new customs controls with the bloc come into effect on 1 January 2022.
Six-in-10 (60.3%) cars shipped overseas in November headed into Europe. Asia took 15.6% of exports, the US 13.4% and Australia 1.2%.
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“The industry is as well prepared as it can be for the implementation of full customs controls at UK borders from 1 January but any delays arising from ill-prepared freight or systems will place further stress on businesses that operate ‘just in time’," said Hawes.
"Should any problems arise, contingency measures must be implemented immediately to keep cross border trade flowing smoothly."
Continuing the recent trend, production of battery electric, plug-in hybrid and hybrid cars took a record share of production, accounting for around a third (32.7%) of all cars made in the month, and more than a quarter (25.5%) over the year-to-date.
Battery electric vehicle output was up in November by 52.9% to 10,359 units, hitting a new high of 13.7% of all production, more than double the level a year ago.
Year-to-date, UK car plants have turned out 797,261 units, some 432,794 less than pre-pandemic 2019 and 667,441 off the five-year pre-Covid average for the period of 1,464,702 cars.
The semiconductor industry makes computer chips and it has failed to keep up with rising demand after it bounced back faster than expected during the coronavirus pandemic.
The global chip shortage has put pressure on a number of carmakers who are competing directly with tech companies and the consumer electronics sector for supply.