2017 UK car manufacturing declines -3%

UK car production declined in 2017, according to the latest figures published today by the Society of Motor Manufacturers and Traders (SMMT).

In total, 1,671,166 vehicles rolled off production lines last year, a -3.0% decrease on 2016 and the first decline for eight years, but it still the second highest output in 17 years.

A -9.8% fall in output for the domestic market drove the overall decline, as the market responded to declining business and economic confidence and confusion over government’s policy on diesel.

Exports also fell, though at a much lower rate, by -1.1%. Overseas demand continued to dominate production, accounting for 79.9% of all UK car output – the highest proportion for five years.

The EU remained the UK’s biggest trading partner, taking more than half (53.9%) of exports, while the appetite for British-built cars rose in several key markets, notably Japan (+25.4%), China (+19.7%), Canada (+19.5%) and the US, where demand increased seven per cent.

Nevertheless, the latest figures are approximately 130,000 units below the mid-year forecast, given lower than expected demand primarily in the domestic market. This significant decline in production underscores the importance of government and industry working together to ensure the right conditions for the sector.

The news comes as UK Automotive restates the need for an urgent agreement on the terms of a post-Brexit transition deal.

Mike Hawes, SMMT Chief Executive, said, ‘The UK automotive industry continues to produce cars that are in strong demand across the world and it’s encouraging to see growth in many markets. However, we urgently need clarity on the transitional arrangements for Brexit, arrangements which must retain all the current benefits else around 10% of our exports could be threatened overnight.

‘We compete in a global race to produce the best cars and must continue to attract investment to remain competitive. Whilst such investment is often cyclical, the evidence is that it is now stalling so we need rapid progress on trade discussions to safeguard jobs and stimulate future growth.’