SMMT forecasts UK car production recovery after "dismal" 2021

SMMT forecasts UK car production recovery after “dismal” 2021

It was a good year for the “small-volume, high-luxury premium vehicle” segment as well, SMMT chief executive Mike Hawes observed, while noting that the UK industry’s “diversity between high-value, luxury, sports performance and volume” cars means “every company is affected in a slightly different way” by the semiconductor shortage.

As the chip crisis restricted production, many manufacturers shifted focus exclusively to building high-margin models to lessen the impact on revenues.

However, Hawes anticipates that while “the semiconductor issue is going to be tough in the first half of the year, it will ease and that should flow through to production output”.

It will be difficult to compensate for the loss of Honda’s Swindon factory and other areas of lost capacity, but “with a fair wind in terms of component supply”, the UK should build more than a million cars in 2022. 

To get back to a circa-1.5 million annual output figure, last achieved in 2018, Hawes said new entrants would be needed. This is “not beyond the realms of possibility but isn’t factored into the calculations”, he said.

“What really matters is getting the supply of components and bolstering output of existing plants, and if some of those plants can secure new models in the medium term, then it can get to, certainly, consistently above one million.”

Elsewhere, production for overseas markets dropped 5.8% – not as steeply as domestic production, which declined by 10.6%. Exports still account for 80% of all cars built in the UK, while the European Union accounts for 55% of that figure, “despite frictions and costs” arising from new trading agreements introduced in 2021.

The SMMT notes that, while the avoidance of a no-deal Brexit was good news for the automotive industry, some 91% of UK firms reported extra delays and costs as a result of added European border paperwork and administrative duties, and Hawes doesn’t anticipate that familiarity with the new processes will ultimately reduce the economic impact of the new arrangements.