UK car production has significantly declined due to a shift towards electric vehicles and reduced export volumes.
- Production for both domestic and export markets fell by over 20% in September, compared to a strong performance the previous year.
- Shipments to China and the EU saw significant drops, although exports to the US increased.
- The decline is attributed to the retooling of factories to focus on electric and hybrid vehicles.
- The automotive sector remains the UK’s largest exporter, highlighting the importance of strategic support during this transition.
The UK’s car production faced a notable decline in September, with output for domestic and export markets dropping by over 20%. This reduction follows a particularly strong September in the prior year, accentuating the year-on-year comparison. Although domestic market production saw a 6.5% increase year-to-date, a significant 14.4% drop in exports led to an overall production decline of 10.2% for 2024 so far, with a total of 592,862 units produced.
The slump in export volumes was most pronounced in key overseas markets. Shipments to China, a major destination for UK cars, fell by 23.1% amid China’s economic slowdown. Despite a GDP growth of 4.6% for China in the third quarter of 2024, this figure fell short of expectations, leading to decreased demand for imported products like vehicles. In response, China’s government has implemented measures to stimulate growth. Similarly, UK car exports to the EU saw a 28.6% decrease, amidst a broader decline in car sales across the European bloc, with major markets such as Germany, France, and Italy experiencing significant downturns. However, the US market provided a silver lining, as exports increased by 24.6% to 8,210 units, representing 16% of all UK car exports for the month.
This production downturn is largely ascribed to the automotive industry’s pivot towards electric and hybrid vehicle manufacturing. In alignment with the UK’s objective to eliminate internal combustion engine vehicles by 2030, manufacturers are retooling facilities to focus on greener technologies. In September, almost a third of cars produced were electric or hybrid models, underscoring this strategic redirection. According to Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders, these production declines are anticipated as temporary. Hawes emphasizes the necessity for supportive industrial and market conditions to foster sector growth, urging government action in the upcoming Autumn Budget to enhance business confidence, draw investment, and ensure competitiveness.
Despite the current challenges in production, the automotive industry remains the UK’s largest exporter of manufactured goods, contributing 13.9% of total exports in the first half of 2024. This reinforces the sector’s critical role in the national economy as it navigates the transition to zero-emission vehicles. Manufacturers are counting on favorable government policies and investments to maintain their competitive edge globally and to meet the growing demand for electric vehicles.
The UK’s automotive industry is in a pivotal transition, requiring strategic support to navigate the shift toward electric vehicles while maintaining export strength.
