Business

UK car production falls as domestic demand slumps

UK car production Image copyright Getty Images

The number of cars made in Britain fell in February as domestic demand slumped by "double digit figures", industry figures suggest.

The Society of Motor Manufacturers and Traders (SMMT) said that 145,475 vehicles were built during the month - 4.4% fewer than a year previously.

It blamed a 17% fall in production for the UK market, where consumers are holding back on big ticket purchases.

Boss Mike Hawes said the figures were of "considerable concern".

More than eight out of ten cars made in Britain are exported, with demand in this market dipping only slightly in February, according to the figures.

However, it was domestic demand that suffered, falling from 34,143 to 28,336 units - the seventh consecutive month of decline at home.

According to analysts, new car sales have been falling in the UK as Brexit-related uncertainty weighs on consumer spending decisions.

Image copyright Getty Images

They also blame the weaker pound since the Brexit vote, which has made imported vehicles more expensive, and confusion over the future of diesel.

Last week, ratings agency Moody's said it expected new car registrations to fall 5.5% in 2018, following a 5.7% drop in 2017.


Analysis: The Leggett, Business correspondent, BBC News

The SMMT says the steep decline in production destined for the UK market is of considerable concern. But the bigger worry lies elsewhere.

British car manufacturing is heavily reliant on exports. Eight out of every ten cars built in the UK are now sold abroad, more than half of them in the European Union.

While the Brexit transition deal should allow business as usual to continue for the moment, car companies still don't know what the future holds long term.

With major investment decisions due this year - such as where Vauxhall's parent PSA Group will build the new Astra - there's a risk uncertainty could make it harder for UK factories to compete with plants in other countries.


The UK will have the "worst performing" car market of any big European economy, it added.

Commenting on the February production figures, Mike Hawes, said: "Another month of double digit decline in production for the UK is of considerable concern, but we hope that the degree of certainty provided by last week's Brexit transition agreement will help stimulate business and consumer confidence over the coming months.

"These figures also highlight the scale of our sector's dependency on exports, so a final deal that keeps our frictionless trade links with our biggest market, the EU, after December 2020 is now a pressing priority."

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