SMMT ‘optimistic’ after 5.6% June automobile manufacturing uplift

The Society of Motor Producers and Merchants (SMMT) chief govt Mike Hawes has mentioned there may be “optimism” concerning the UK’s automobile manufacturing sector after output grew 5.6% year-on-year in June.

Automobile production volumes rose for a second consecutive month to succeed in 72,946 models final month to depart the sector 19.2% down year-to-date and 33.2% under 2019 ranges, with manufacturing topping 403,131 models in turbulent first half 12 months.

The SMMT’s automobile manufacturing forecast for 2022 now stands at 866,000 models, representing 1% development on 2021 however 113,285 models under its March outlook.

However because the SMMT as soon as once more highlighted the influence of COVID-19, part provide points, Russia’s invasion of Ukraine and Honda’s 2021 closure of its Swindon plant Hawes prompt there have been grounds for optimism.

“Automotive producers have been affected by a ‘lengthy COVID’ for a lot of 2022, as international part shortages undermine manufacturing and put provide chains beneath excessive stress,” he mentioned this morning (July 28).

“Key mannequin changeovers and the closure of a significant plant final 12 months have additionally impacted output, however there are grounds for optimism with rising output during the last two months.

“As these points recede over the subsequent 12 months or two, funding in new applied sciences and processes will probably be important however this can rely on our underlying competitiveness.

“Sky-high power prices, non-competitive enterprise charges and abilities shortages should all be addressed if we’re to construct on our inherent strengths and seize the alternatives offered by the sprint for decarbonised mobility.”

Mounted development, rising prices

What Automotive? editorial director Jim Holder was much less optimistic, nevertheless.

“With the continued semiconductor scarcity, power disaster and the war in Ukraine, it’s unlikely that can change for a while,” he mentioned.

“That leaves the UK’s automobile producers strolling a tightrope: the cost-of-living disaster is proscribing their potential at precisely the time they’re meant to be present process a once-in-a-century transition in the direction of electrical car and carbon-neutral manufacturing.”

KPMG’s UK Automotive Accomplice Chris Knight additionally highlighted that OEMs face a battle to stability hovering prices and a transition to electrical autos (EV) with the specter of failing client demand.

Knight mentioned: “The price of automobile manufacturing has elevated resulting from worth rises of uncooked supplies, elements, transport and power. Producers have restricted potential to soak up further value and can move this onto customers within the type of larger costs. 

“Shoppers are keen to pay a premium for now, as demand for brand new automobiles nonetheless far outpaces provide, nevertheless this willingness could decline if client confidence erodes.”

Ongoing EV funding

In the present day’s SMMT automobile manufacturing information confirmed that electrical car manufacturing had elevated 6.5% YTD, to 32,282, as £3.4bn funding dedicated to UK’s zero emissions future in H1.

The UK’s output of hybrid, petrol and diesel automobiles declined by 19.9%, 8.0% and 60.2% respectively.

SMMT June 2022 car production data graphicDeclining export volumes underpinned the UK automobile manufacturing sector’s productiveness decline, with 23.9% (99,388) fewer automobiles produced for abroad markets throughout the first half of 2022.

Exports nonetheless account for 78.6% of all manufacturing output, nevertheless.

Important funding continues to be made within the UK’s automotive manufacturing sector, in line with the SMMT.

Greater than £3.4bn in new investments has been introduced up to now in 2022, primarily for EV manufacturing and provide chains.

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