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UK car output declines further, 2022 improvement foreseen

UK car production fell 6.7% on-year to 859,575 units due to multiple factors, most Covid-19-related, says the Society of Motor Manufacturers and Traders (SMMT). However, electric vehicle output surged, while improvement is forecast for 2022 thanks to a potential £4.9 billion ($6.6 billion) of investment and recovery in production.

The shortage of semiconductors was the principal cause of the output decline, with factories having to reduce or even pause production while awaiting parts whose supply has been heavily constrained by the global pandemic, SMMT observes. Carmakers also wrestled with staff shortages arising from the need to self-isolate, and depressed demand with car showrooms closed for months due to lockdowns. The closure of a major UK car plant in July also contributed to the decline.

Honda saw the largest output drop of 21.5% in 2021 to 54,465 units, while largest producer Jaguar Land Rover reduced production 9.6% to 220,554 units, Kallanish notes.

British car factories nevertheless produced an annual record 224,011 of battery electric (BEV), plug-in hybrid (PHEV) and hybrid electric vehicles (HEV), representing over 26% of all cars made.

Some 80% of cars produced were exported, with the EU accounting for 55% of exports, despite shipments there dropping 3% on-year in 2021. Shipments to second- and fourth-largest markets the US and Japan fell 10.5% and 36% respectively. Third-placed China however increased intake by 0.6%.

The avoidance of an EU/UK “no deal” and the signing of the Trade and Cooperation Agreement (TCA) saw publicly announced investment for the industry reach a potential £4.9 billion. This includes vital investment announcements in Ellesmere Port, Halewood, Norfolk, Sunderland and Surrey.

Adam Smith Germany