UK car production falls for 8th consecutive month as global chip shortage persist

25 March 2022

Car Manufacturing summary Feb 2022
Car Manufacturing summary Feb 2022

UK car production fell -41.3% in February to 61,657 units as the global semiconductor chip shortage persists. One-in-four cars made was either an electric or hybrid vehicle, totalling 15,905 units. As global economic headwinds hold back recovery, the sector is calling for urgent action to alleviate soaring business energy costs & encourage investment.

UK car production fell -41.3% in February, with 61,657 units made, according to the latest figures released today by the Society of Motor Manufacturers & Traders (SMMT). 43,351 fewer cars were made than in the same month in 2021, primarily due to the persistent global shortage of semiconductors causing some factories to pause production, and the loss of output following the closure of a major plant in Swindon last summer.

In what was the weakest February for UK car makers since 2009 (when 59,777 cars were made), production declined for both the domestic and overseas markets, down -35.8% and -41.8% respectively. Exports accounted for more than eight in 10 cars made, with the majority of shipments (62.4%) heading into the European Union, equivalent to 31,673 units. The US, in comparison, took 11.0% of exports, and China 8.7%.

UK production of the latest electrified vehicles (EVs) continued apace with plug-in hybrids, hybrids and battery electric cars combined representing more than a quarter (25.8%) of all production in the month, or 15,905 units. The news comes after fresh SMMT analysis published this week revealed some £10.8 billion has been committed to UK electric vehicle production and gigafactories since 2011 (based on analysis of publicly announced investments delivered or secured by vehicle manufacturers and battery producers into UK R&D and production since 2011).

This investment has resulted in the production of almost a quarter of a million alternatively fuelled cars over the past decade, but fresh commitments to domestic battery production are now essential if volumes are to grow further. The current trajectory aims to boost capacity to 41GWh by 2027 but, if the UK is to produce around one million electric vehicles a year, 60GWh will be needed. This underscores the importance of creating favourable investment conditions for the sector, notably in terms of access to skilled labour, competitive fiscal regimes and – most urgently – competitively priced clean energy.

Car output rolling year totals February 2022
Car output rolling year totals February 2022

Mike Hawes, SMMT Chief Executive said, “The automotive industry is undergoing its most radical transformation in more than a hundred years, but manufacturers are simultaneously facing the most extreme operating conditions as global economic headwinds drive up costs and constrain supply. The sector entered 2022 hopeful for recovery, but that recovery has not yet begun, and urgent action is now needed to help mitigate spiralling energy costs and ensure the sector remains globally competitive to encourage the investment essential to growth, job security and the delivery of net zero ambitions.

Against an already tough economic backdrop, the Russian state’s invasion of Ukraine at the end of February represents a further challenge for the UK automotive sector. Although, in 2021, Russia took just 1.1% of UK car exports and Ukraine just 0.5%, many critical raw materials, parts and components, including aluminium, palladium and nickel, which is used in battery manufacturing, and wiring harnesses, are sourced from the region. The sanctions imposed are supported by the industry, but raise additional challenges to the sector in the medium to long-term.

About SMMT and the UK automotive industry

UK new car production Feb 2022
UK new car production Feb 2022

The Society of Motor Manufacturers & Traders (SMMT) is one of the largest and most influential trade associations in the UK. It supports the interests of the UK automotive industry at home and abroad, promoting the industry to government, stakeholders and the media.

The automotive industry is a vital part of the UK economy, and integral to supporting the delivery of the agendas for levelling up, net zero, advancing global Britain, and the plan for growth. It contributes £60 billion turnover and £12 billion value added to the UK economy, and invests around £3 billion each year in R&D. With more than 155,000 people employed directly in manufacturing and some 800,000 across the wider automotive industry, it accounts for 11% of total UK exports with more than 150 countries importing UK produced vehicles, generating more than £73 billion of trade.

More than 30 manufacturers build more than 70 models of vehicle in the UK, supported by more than 2,500 component providers and some of the world's most skilled engineers. The automotive sector also supports jobs in other key sectors – including advertising, chemicals, finance, logistics and steel. Many of these jobs are outside London and the South-East, with wages that are around 25% higher than the UK average.

More detail on UK automotive available in SMMT's Motor Industry Facts 2021 publication at: smmt.co.uk/facts21


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