The lowest number of cars leaving Britain’s factories last year since 1956, as the industry warned that rising energy costs and further shortages of computer chips would hamper its recovery.
Car production fell in the UK and around the world in 2020 as the coronavirus pandemic swept the world, but many industry players expected a quick improvement. Instead, the disruption triggered a global shortage of semiconductor chips, leading to an even worse 2021.
Total car production in the UK fell 6.7% to just under 860,000, according to the Society of Motor Manufacturers and Traders (SMMT), the industry lobby group. Its managing director, Mike Hawes, described it as “a dismal year”, with production down more than a third from 2019.
Jaguar Land Rover’s production for the year fell a tenth from the previous year, but the automaker managed to regain its title as Britain’s biggest manufacturer, after briefly losing to Nissan in 2020.
Hawes said the industry had successfully coped with the additional costs of Brexit, although he added executives were monitoring recent delays at the Dover Canal crossing.
However, Hawes warned that energy price hikes which have also hit households will further aggravate the difficulties of British carmakers. He said the industry urgently needed “measures to mitigate escalating energy costs that threaten viability”, and warned that higher costs could mean higher prices.
Factories are prepared for price increases of up to 70% when old contracts expire. Energy is typically the third highest cost for automakers, after materials and labor, but the sector is pushing to be designated as an energy-intensive industry to receive additional government support .
Still, Hawes said the industry is approaching 2022 with “much more optimism,” especially as semiconductor supply grows to meet demand after earlier investments by chipmakers. He said he expected the industry to return to 1 million cars produced each year on a consistent basis – although he added that a return to more than 1.7 million cars built in 2016 , the year of the Brexit referendum, was unlikely without new manufacturers choosing the UK. .
The SMMT highlighted £4.9bn of investment announced during the year by the car industry – although this includes the speculative announcement of £2.5bn by Coventry council in a battery factory project that has yet to attract a lead investor.
The number of tailpipe carbon-free battery electric cars produced in the UK has increased by 72% in 2021, but remains only 12th of total UK production.
The UK van industry has fared considerably better than passenger car manufacturers, with production up 24% on 2020 and 3% on 2019. Hawes said the boom in delivery of online shopping had contributed to “extraordinarily high demand” for pickup trucks.