UK car production has so far fallen compared with last year as faltering demand from UK consumers and uncertainty over Brexit casts a pall over the industry.
Leading industry figures are complaining about a lack of dialogue from the UK government, not least on Brexit but on radical plans to ban new sales of conventional cars in the UK by 2040.
UK car output was down by 13.7% in June compared with the same period a year earlier, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
It marks the third consecutive month of decline, with UK car production having fallen by 2.9% year-to-date.
The UK had previously been forecast to churn out 2m cars by 2020, eclipsing the all-time record of 1.92m cars produced in 1972. Last year, production rose to 1.7m cars as UK plants hit their highest output levels in twelve years.
Cooling domestic market
The vast majority of the recent decline in output this year appears to be driven by falling demand within the UK. Over the first half of the year, domestic demand slid by 9.5%, while exports were little changed in percentage terms, down by just 0.9%.
Flagging demand in the home market chimes with recent weak growth readings for the UK economy, with higher inflation believed to be eroding consumer spending power. Weakness in sterling since the Brexit vote has pushed up the UK´s overall price levels.
The SMMT claimed Brexit uncertainty was also undermining investment plans within the sector, calling for the UK to seek a transitional agreement for continued membership of the EU single market and customs union until a new trade agreement is in place.
“Brexit uncertainty is not helping investment and growth is stalling. The government has been in “listening” mode but now it must put on the table the concrete plans that will assure the future competitiveness of the sector. Investors need certainty,” said Hawes.
Independent forecasts, such as the one commissioned by AutoAnalysis, predict UK car output to pick up in the second half of 2017 based on positive contributions from new model launches and updates concentrated in the premium segment of the market.
SMMT, however, believes output will fall below the earlier hopes for the UK industry to produce two million cars by 2020.