UK car production slumps by a fifth as firms hit by parts shortages

UK car production slumped by a fifth in the first half of the year as manufacturers battled with upheaval in global supply chains, soaring costs and a shortage of skilled workers and microchips.

Almost 100,000 fewer vehicles rolled of production lines between January and June compared to the same period a year earlier, new industry figures show.

The Society of Motor Manufacturers and Traders (SMMT) said parts shortages had put supply chains under “extreme pressures”, impacting production more severely than expected.

The 403,131 new vehicles produced was lower than in 2020 when the industry was hit by Covid lockdowns, and in the 2009 global financial crisis. Overall, car production is down by 19.2 per cent in the first six months of 2022, compared to the previous year.

“The impact of the last three to four months was more severe than had been anticipated,” said SMMT chief executive Mike Hawes.

“Car manufacturers have been suffering from a ‘long Covid’ for much of 2022, as global component shortages undermine production and put supply chains under extreme pressure,” he added.

The decline was driven largely by a fall in export volumes, with 23. per cent fewer cars produced for overseas markets during the first half of 2022. Sales to the EU - Britain’s largest export market - fell 10.6 per cent while US sales dropped 56.1 per cent.

Production of battery electric vehicles (BEVs) increased, with 32,282 produced in the first half of the year – an increase of 6.5 per cent.

In June, production of BEVs jumped by 44.2 per cent, resulting in a record output of zero-emissions vehicles for the month.

Production of hybrid vehicles slumped 19.9 per cent, while petrol-powered models were down 8 per cent and diesel 60.2 per cent.

Drivers of fossil-fuel powered vehicles have paid record-high prices at the pumps as Russia’s invasion of Ukraine has catalysed a rise in oil prices.

Mr Hawes added: “Sky-high energy costs, non-competitive business rates and skills shortages must all be addressed if we are to build on our inherent strengths and seize the opportunities presented by the dash for decarbonised mobility.”