The Society of Motor Producers and Merchants (SMMT) chief government Mike Hawes has stated there may be “optimism” concerning the UK’s automotive manufacturing sector after output grew 5.6% year-on-year in June.
Automobile manufacturing volumes rose for a second consecutive month to achieve 72,946 items final month to depart the sector 19.2% down year-to-date and 33.2% beneath 2019 ranges, with manufacturing topping 403,131 items in turbulent first half yr.
The SMMT’s automotive manufacturing forecast for 2022 now stands at 866,000 items, representing 1% progress on 2021 however 113,285 items beneath its March outlook.
However because the SMMT as soon as once more highlighted the affect of COVID-19, element provide points, Russia’s invasion of Ukraine and Honda’s 2021 closure of its Swindon plant Hawes steered there have been grounds for optimism.
“Automotive producers have been affected by a ‘lengthy COVID’ for a lot of 2022, as world element shortages undermine manufacturing and put provide chains underneath excessive stress,” he stated this morning (July 28).
“Key mannequin changeovers and the closure of a serious plant final yr have additionally impacted output, however there are grounds for optimism with rising output during the last two months.
“As these points recede over the subsequent yr or two, funding in new applied sciences and processes can be important however this can depend upon our underlying competitiveness.
“Sky-high power prices, non-competitive enterprise charges and expertise shortages should all be addressed if we’re to construct on our inherent strengths and seize the alternatives introduced by the sprint for decarbonised mobility.”
Mounted pattern, rising prices
What Automotive? editorial director Jim Holder was much less optimistic, nevertheless.
“With the continuing semiconductor scarcity, power disaster and the warfare in Ukraine, it’s unlikely that can change for a while,” he stated.
“That leaves the UK’s automotive producers strolling a tightrope: the cost-of-living disaster is limiting their potential at precisely the time they’re meant to be present process a once-in-a-century transition in the direction of electrical automobile and carbon-neutral manufacturing.”
KPMG’s UK Automotive Accomplice Chris Knight additionally highlighted that OEMs face a battle to stability hovering prices and a transition to electrical autos (EV) with the specter of failing shopper demand.
Knight stated: “The price of automotive manufacturing has elevated resulting from worth rises of uncooked supplies, parts, transport and power. Producers have restricted skill to soak up further price and can go this onto shoppers within the type of larger costs.
“Shoppers are keen to pay a premium for now, as demand for brand new vehicles nonetheless far outpaces provide, nevertheless this willingness could decline if shopper confidence erodes.”
Ongoing EV funding
At this time’s SMMT automotive manufacturing knowledge confirmed that electrical automobile manufacturing had elevated 6.5% YTD, to 32,282, as £3.4bn funding dedicated to UK’s zero emissions future in H1.
The UK’s output of hybrid, petrol and diesel vehicles declined by 19.9%, 8.0% and 60.2% respectively.
Declining export volumes underpinned the UK automotive manufacturing sector’s productiveness decline, with 23.9% (99,388) fewer vehicles produced for abroad markets throughout the first half of 2022.
Exports nonetheless account for 78.6% of all manufacturing output, nevertheless.
Vital funding continues to be made within the UK’s automotive manufacturing sector, in response to the SMMT.
Greater than £3.4bn in new investments has been introduced to date in 2022, primarily for EV manufacturing and provide chains.