UK vehicle making hits lowest level since 1953, excluding Covid

British car and van production in the first half of 2023 has hit its lowest level since 1953, excluding the industry shutdown during Covid. According to data from the Society of Motor Manufacturers and Traders (SMMT), car output fell by 7.3% in the six months leading up to June, while the closure of Vauxhall’s Luton van plant contributed to a staggering 45% decrease in van production.

One of the key factors affecting production levels was the uncertainty surrounding tariffs in the US, which is the UK industry’s second-largest market. This led to some firms slowing down or halting production in the first half of the year. However, the US-UK tariff deal that recently came into effect has the potential to boost confidence in the industry.

The SMMT welcomed the government’s electric vehicle (EV) grants as a positive step towards supporting the industry. However, they noted that the new grant system lacked clarity and had been implemented without consulting the industry. Mike Hawes, the chief executive of SMMT, expressed hope that the decline in production seen in the first half of the year would be the lowest point for the UK auto industry.

A deal with the US to reduce tariffs from 27.5% to 10% was announced in May and came into effect on June 30th. This resulted in a small rise in vehicle production in June. Despite this improvement, the SMMT does not expect production levels to return to pre-2021 levels of one million vehicles by the end of the decade.

Mr. Hawes highlighted the government’s ambitious target of producing 1.3 million vehicles per year by 2035, emphasizing the need for new entrants in the UK production sector to meet this goal. Production of electrified vehicles saw a modest increase of 1.8%, with battery, hybrid, and plug-in hybrid vehicles accounting for a record two in five of vehicles produced.

In a recent announcement, the government confirmed the reintroduction of grants of up to £3,750 for some EVs priced at or below £37,000. However, confusion persists regarding which vehicles will qualify for these discounts. Eligibility will be based on the carbon emissions produced during the manufacturing of the vehicle and its battery, with specific thresholds yet to be defined.

Mr. Hawes stressed the importance of gaining clarity on the eligibility criteria for the EV grants, especially with September being a significant month for new car registrations. The Department of Transport assured that dozens of models would be eligible for the grant, providing a substantial boost for the industry and savings for drivers. The £650 million in grant money will be allocated on a first-come, first-served basis.

Overall, while challenges persist in the UK automotive industry, the implementation of EV grants and tariff reductions signal positive steps towards revitalizing production levels and driving growth in the sector. The industry eagerly awaits further clarity on eligibility criteria to maximize the benefits of these initiatives.