Good News For Motor Industry

Sat 9th Jul 2022

British car production may be showing signs of a return to good health according to the Society of Motor Manufacturers and Traders, but analysts are urging caution.

The industry has faced a host of blocks in recent years, from Brexit supply chain shortages to pandemic factory lockdowns, it has been a difficult time, not just in the UK, but across the globe.

Many manufacturers have closed the order book on some of their most popular models due to an inability to meet demand, with brands like Ford unable to sell either the Fiesta or the Focus in the current market. A lack of microchips is the current issue, combined with the ongoing war in Ukraine having an impact, but news from the SMMT is positive, with an increase in production rates for the first time in almost a year.

May saw a 13.3 per cent increase, the first signs of growth for the hard-hit industry after ten consecutive months of declining production levels. The SMMT have forewarned that the motor manufacturing industry is still some way off pre-pandemic production levels.

“May’s return to growth for UK car output is hugely welcome after 10 months of decline, indicating the sector’s fundamental resilience,” said SMMT chief executive Mike Hawes.

“Any recovery, however, will be gradual as supply chain deliveries remain erratic, business costs volatile and geopolitical instability still very real. 

“With the industry racing to decarbonise, we need to safeguard manufacturing competitiveness, drive investment and develop the skill base. 

“Government and industry have a role to play in this transformation and collaboration will be essential if the UK is to remain at the forefront of automotive innovation.”

It’s not all good news though, analysts from GlobalData have warned that the energy price crisis is likely to impact the industry in many ways.

“While manufacturers are still in the position of fulfilling order backlogs under long waiting times caused by an unprecedented shortage of critical parts this year, underlying demand prospects are deteriorating with lower economic growth and higher price inflation,' said David Leggett from GlobalData.

“Real incomes for households and businesses will be increasingly squeezed later this year and that will dent new car demand – at home and in major export markets.”