Car production plummets in UK due to pandemic and chip shortage
The Society of Motor Manufacturers and Traders (SMMT) has reported that auto production fell dramatically in July, citing ongoing labor shortages related to the ‘pandemic and the ongoing shortage of semiconductors.
Production is 18.3 percent higher than at the peak of the pandemic, but 28.7 percent below pre-pandemic production levels of 2019. Notably, production plummeted last month, with the production of 53,500 cars down 37. .6 percent compared to the same month last year. The industry group said this is the worst July performance since 1956 when 51,472 cars were produced.
The summer plant closures also impacted production, which fell 38 percent for the UK market (8,233) while export production fell 37.2 percent (45,205). Exports accounted for more than eight out of every ten vehicles built in July.
The SMMT cited staff shortages as a result of a large number of people being requested to go into self-isolation (“pinged”), forcing some factories to shift their summer shutdown schedules. It also pointed to the ongoing global semiconductor shortage as a cause for concern.
The chip shortage has forced Ford, Jaguar Land Rover, Volkswagen, General Motors, Nissan, Daimler, BMW, Renault and most recently Toyota to close factories, scale back production or exclude high-end features such as integrated satellite navigation systems that rely on advanced semiconductors. . technology. In June, Intel CEO Pat Gelsinger warned that it could take many years to resolve the shortfall as supply chains grapple with “explosive growth” in semiconductor demand.
Trading group CEO Mike Hawes commented: “These numbers expose the extremely harsh conditions UK carmakers continue to face. While the impact of the pandemic will learn as self-isolation rules change, the global semiconductor shortage shows little sign of abating.
“The UK car industry is doing what it can to keep production lines running, a testament to the adaptability of its workforce and manufacturing processes, but governments can help by continuing the supportive Covid measures currently in place and improving our competitiveness with a reduction in energy taxes and business rates for a sector that is strategically important in delivering net zero.”
On a more positive note, 26 percent of cars produced in July had alternative fuel (battery-electric, plug-in hybrid, or hybrid-electric) – the highest share to date. In 2021, 126,757 alternative fuel cars have been produced in the UK so far.
Richard Peberdy, UK Head of Automotive at KPMG, said: “Carmakers will curse a mix of factors that stifle their ability to produce more vehicles, namely material and labor shortages and higher shipping costs. Manufacturers are recording costs for now, but we could soon pass on price increases to consumers if problems persist, which risks dampening the sales recovery.
“Many car manufacturers find themselves in a dilemma between electric vehicles (EV) and traditional combustion engines. Despite some encouraging consumer adoption of EV, mainstream petrol cars are still popular for their lower price point, with some remaining reluctance about EV technology and reliance on charging.”
“We can expect more calls from the industry for further government support to help produce the vehicles that will lead us into a carbon-free future.”
While electric car ownership in the UK is skyrocketing – with new registrations up 117 percent this year compared to 2020 – people living in urban centers, high-rise flats, and town halls are significantly less likely to have access to their own driveway, making it difficult to install home charging solutions.
A new program is being piloted in the London Borough of Lambeth to address the mismatch between electric vehicle ownership and access to charging stations. The plan, in the London Borough of Lambeth, will deploy public electric vehicle (EV) charging in areas that are underutilized.