The automotive industry has worked tirelessly for years to finetune its efficiency and productivity to maintain its position as a successful and sustainable sector. However, the last few years have introduced new challenges. In 2019, both UK automotive production and registrations fell. This is reflected in almost all of the economic indicators for the sector. A subdued economic environment and political impasse on the UK’s withdrawal from the EU resulted in low consumer and business confidence. UK production volumes were also impacted by multiple dates of uncertainty when the UK came close to leaving the EU without a deal, as well as by weak global demand.
In 2019, UK car production fell for the third consecutive year, down by -14.2% to 1.3 million units – its lowest level since 2010 and some 400,000 units off the recent 2016 peak. Output was affected by multiple factors, notably several plant shutdowns to minimise potential impacts of the UK leaving the EU without a deal. Consumer and business confidence was also weak at home, with demand for UK-built vehicles in key overseas markets moderated. A number of significant model production changes also took place.
Similarly, UK commercial vehicle (CV) manufacturing declined by -7.8% in 2019. The fall in output follows a turbulent year, as model changeovers, variable fleet buying patterns and regulatory changes combined to affect production numbers.
The Covid-19 pandemic delivered an immense shock to the UK and global economy. The magnitude of the recession caused by the pandemic is unprecedented in modern times. The UK economy plunged by -19.8% between April and June as social distancing restrictions shuttered economic activity. The government announced several extensive policy interventions to financially support businesses, workers and the wider public during the outbreak, as well as attempting to reduce economic uncertainty and increase resilience. Automotive has been one of the manufacturing sectors hardest hit by the outbreak, with production plants and dealerships shut for several months to help protect staff and the public both in the UK and many other parts of the world. The industry is left with a weakened demand in both the UK and many of the key export markets. 2020 is likely to see all metrics severely impacted, and these impacts may last well into the future given the as-yet unknown progress of the pandemic, as well as continued uncertainty around the UK’s future relationship with the EU and other key trading partners.
These exceptional circumstances will require the industry to go back to the drawing board and rethink its future strategy to balance efficiency with long term resilience.