Car production fell to its lowest September level for 25 years, new figures from the Society of Motor Manufacturers and Traders (SMMT) have revealed.
Just over 114,732 vehicles rolled off factory lines in September, down by 5.0% on the same month in 2019, making it the worst September performance since 1995, as companies continued to wrestle with the uncertain economic and political environment and Covid-related challenging global market conditions.
Production for UK buyers rose by 14.5% – but that equated to a rise of just 3,440 vehicles, to 27,199 cars.
Exports declined 9.7% in the month to 87,533 units – some 9,500 fewer vehicles year-on-year – as shipments to key overseas destinations like China, the EU and US fell 1.2%, 3.3% and 30% respectively.
After the first nine months of 2020, UK car production has dropped 35.9% behind 2019 levels, with 632,824 vehicles built.
The latest independent outlook forecasts factories to make fewer than 885,000 cars this year – the first time volumes will have dipped below one million since 2009.
However, September production of the latest battery electric vehicles bucked all the trends to grow 37% year-on-year, with the overwhelming majority (76.6%) exported, many of these into the EU.
But as the likelihood of a ‘no deal’ Brexit looms, the analysis shows how a 10% World Trade Organisation (WTO) tariff would increase the cost of UK-made electric cars exported to the EU by an average £2,000 per vehicle.
Mike Hawes, SMMT chief executive, welcomed the resumption of Brexit negotiations and called for both sides to prioritise the automotive sector.
He said: “These figures are yet more grim reading for UK automotive as coronavirus continues to wreak havoc both at home and in key overseas markets.
“With the end of transition now just 63 days away, the fact that both sides are back around the table is a relief but we need negotiators to agree a deal urgently, one that prioritises automotive, enhances innovation and supports the industry in addressing the global threat of climate change.
“With production already strained, the additional blow of no deal would be devastating for the sector, its workers and their families.”
The SMMT has previously estimated that increased tariffs could cost UK car makers an additional £4.5bn a year, which they would find impossible to absorb.
Executives from Nissan, Vauxhall and Jaguar Land Rover have all warned that such costs would threaten the future of the UK car industry, while Honda last year announced the closure of its UK manufacturing operations at Swindon.
However, it would prove very difficult for the Government to bail out the automotive sector, having turned down similar pleas from many other parts of the economy, including aerospace and hospitality industries.
Earlier this month Nissan urged UK and EU Brexit negotiators to find a way to maintain its operations in Sunderland, when reports surfaced that the firm had asked the Government to cover the multimillion-pound cost of tariffs that could emerge for exported cars.
Reports from Japan said that both Nissan and fellow automotive giant Toyota had told UK Ministers they will have to cover additional tariffs that could arise if the country cannot conclude a free-trade agreement with the EU.