UK auto production suffered a sharp 37.6 percent drop in its worst July performance since 1956, official figures announced today.
In total, only 53,438 engines rolled off the assembly lines in UK factories last month as manufacturers saw their first drop in production since February.
Industry executives said production had collapsed as manufacturers grappled with the global shortage of semiconductors and staff shortages due to the “pingdemic”.
Chip Shortage Slows Production: Production of cars in UK factories fell 37.6% in July as manufacturers were forced to halt production due to a lack of parts
Records show that total production rose only 18.3 percent (or 552,361 cars) year over year in 2021, when manufacturers were forced to close operations at the height of the lockdown and then work with reduced headcount.
Compared to pre-pandemic levels in 2019, production is 28.7 percent below pace.
The numbers were also the last month production was recorded at Honda’s Swindon factory, with the production line officially closed last month with the factory closing and production being relocated back to Japan.
Before the pandemic broke out, Honda was the UK’s fifth largest automaker, producing around 110,000 Civic hatchbacks annually.
Honda’s UK car plant in Swindon officially ceased production of Civics last month, meaning the 110,000 vehicles produced at the site each year will fade from future records
The greatest burden for manufacturers at the moment is undoubtedly the global shortage of semiconductor computer chips, which is causing enormous delays for vehicle manufacturers around the world.
Last week it was reported that Jaguar Land Rover warned customers about years of waiting for some new models to arrive as factories were forced to pause building new cars due to insufficient computer chips.
Volkswagen also said over the past seven days that it expects further restrictions on the production of its vehicles around the world, as 100,000 fewer cars were made in 2021 than originally forecast.
Toyota, which had chips in stock for years, said supplies are running low and will cut its global passenger car production by 40 percent from September.
General Motors, Ford, Nissan, Daimler, BMW and Renault have also reduced their production.
Stellantis – which includes Peugeot, Citroen, Fiat, Vauxhall, and other base brands – predicts the shortage will last through 2022 after confirming it was forced to shut down at eight of its 44 global factories in the first quarter of the year year, producing 190,000 fewer cars than expected.
With a lack of chip shipments showing no signs of easing, some UK automakers have changed their summer shutdown times to deal with the situation.
This not only allows them to thoroughly clean factories, but also prepare new production lines for the arrival of the latest vehicles.
Industry executives said production had collapsed as manufacturers grappled with the global shortage of semiconductors and staff shortages due to the “pingdemie”.
More than four in five new cars built in the UK were exported overseas last month, with only 53,438 engines produced for customers in the UK
The SMMT confirmed July production for the UK market fell massively by 38.7 percent to just 8,233 units, while production for export fell by a similar amount (37.4 percent) with 45,205 cars shipped overseas.
More than a quarter (26 percent) of all cars manufactured in July were either battery electric (BEV), plug-in hybrids (PHEV), or hybrid electric (HEV), which is the highest percentage for alternative fuel vehicles in history.
This also means that a total of 126,757 greener cars have been manufactured in the UK since the beginning of the year.
Mike Hawes, CEO of SMMT, said: ‘These numbers illustrate the extremely difficult conditions UK automakers continue to face.
“While the impact of ‘pingdemic’ will subside as the self-isolation rules change, the global semiconductor shortage shows little sign of weakening.”
He said the industry is doing what it can to keep production lines running and said this is evidence of the adaptability of the UK workforce and their manufacturing processes.
Hawes added, however, that it is imperative for the government to continue with the “supportive Covid measures” currently in place so that the sector can increase its competitiveness by lowering energy taxes and business tariffs.
Richard Peberdy, UK Head of Automotive at KPMG, added: “Automakers will curse a mixture of factors that are stifling their ability to produce more vehicles, namely material and labor shortages and rising shipping costs.
“Manufacturers are paying for the time being, but we could soon see price increases being passed on to consumers if problems persist, which could dampen the recovery in sales.”
Research from GlobalData, a leading data and analytics company, suggests that the broad automotive industry – so far this year – has been hit by production downtime and revenue of up to $ 100 billion due to chip shortages.
“The losses will extend at least into the third quarter, but are expected to subside in the fourth quarter as the chip inventories are replenished,” said Calum MacRae, automotive analyst at GlobalData.
The latest analysis by GlobalData puts the loss in sales of vehicle manufacturers since the beginning of the year due to the discontinued production at 60.9 billion US dollars to 100.5 billion US dollars (73 billion pounds). Around 155 plants around the world have been shut down due to a shortage of important semiconductor components.
‘While Ford has suffered the most volume losses, General Motors can claim that the two factories are hardest hit by the chip shortage. The Fairfax and Ingersoll plants have been idle for 28 weeks this year, ”says MacRae.
“That they are so affected shows how GM has navigated the crisis by enriching its model mix and focusing its efforts on the most demanded and profitable vehicles.
‘Next hardest hit were Stellantis’ Belvidere plant (25 weeks downtime) and GM’s Lansing Grand River (22 weeks). Ford’s hardest hit plant is the F-150 plant in Kansas City. ‘
July production is the lowest this month in 65 years. The last time so few vehicles were built in the UK in a seventh month was just 11 years after the end of World War II
Commenting on the numbers, Jim Holder, editor-in-chief of What Car? Said the numbers for July – traditionally a weak month for auto sales – have shown the “drastic” impact of chip scarcity on industry and consumer buying.
“For new car buyers, this means longer waiting times on certain models and fewer choices at a time when the industry should be on the go after months of Covid restrictions,” he said.
“Estimates suggest that it will not be until early 2022 for the supply bottlenecks to subside and for production levels to recover. Until then, manufacturers will have to manage customer demand and expectations. ‘
However, Holder added that despite the lack of available models, there is still a huge appetite for new cars in the UK.
He added, “The good news is that the shortage didn’t put customers off. Our latest survey of 1,353 buyers in the market found that 35 percent will buy within the next four weeks, while 29 percent expect to buy a vehicle within one to three months, suggesting a steady backlog of wear by the end of the year.
‘The challenge for manufacturers is whether they can meet customer expectations.’
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