Brexit blamed for slump in UK car production

No deal 'must be taken off the table,' says industry body

The continued uncertainty caused by the possibility of Britain leaving the European Union has been specifically blamed for a huge slump in production in the United Kingdom car industry in April.

The UK was supposed to leave the EU on March 29, a date which has now been put back twice and is currently scheduled for October 31, and the Society of Motor Manufacturers and Traders, known as the SMMT, said this was why April was an "extraordinary month" resulting in precautionary factory closures and a 44.5 percent fall in production.

Just 70,971 cars were produced in April, a reduction of 56,999 from the same period a year ago, with domestic sales falling by 43.7 percent and overseas markets by 44.7 percent.

"Today's figures are evidence of the vast cost and upheaval Brexit uncertainty has already wrought on UK automotive manufacturing businesses and workers," said the SMMT chief executive Mike Hawes.

"Prolonged instability has done untold damage, with the fear of 'no deal' holding back progress, causing investment to stall, jobs to be lost and undermining our global reputation."

Some of problems were exacerbated by companies stockpiling materials and making logistical plans for the March 31 exit which never happened. The SMMT has warned that the industry will not be in a position to repeat such procedures at the end of October, should the country find itself facing up to the prospect of a no deal-Brexit–something that several of the leading candidates to succeed Theresa May as prime minister have yet to rule out.

"This is why 'no deal' must be taken off the table immediately and permanently, so industry can get back to the business of delivering for the economy and keeping the UK at the forefront of the global technology race," Hawes added.

So far this year, car productivity in the UK is down by more than one fifth for the same time 12 months ago, and the SMMT estimates that overall, the 2019 figure will be 10 percent lower than for 2018. Favorable exit terms from the EU, however, could provide the UK car industry with an end of year boost, which would be particularly welcome in light of a generally tough international climate for the auto industry.

Harsher environmental rules in the light of the Volkswagen emissions scandal, trade tensions between the US and China, and uncertainty over the future of the electric vehicle industry are all contributing to global problems for car producers.

These latest figures come one month after the University of Oxford's Said Business School published a damming report entitled "Death by a thousand cuts: The strategic outlook for the U.K. automotive industry beyond Brexit."

"The great and present danger is that the decisions on where to produce new models will continue to go against the UK, until existing plants here become sub-scale and thus uncompetitive, and will close," said the School's Professor Matthias Holweg.

"This would invariably lead to a hollowing-out of the UK's component supply chain, effectively condemning the automotive industry to a slow 'death by a thousand cuts' …Whichever way one looks, it is hard to underestimate the threat Brexit represents to the future of UK manufacturing."