Powerful financial setting ‘overshadows’ August automobile manufacturing restoration

An “extraordinarily robust and unsure financial setting” for automobile producers has overshadowed a 34% restoration in productiveness throughout August, the SMMT has stated.

The newest knowledge revealed by the Society of Motor Producers and Merchants (SMMT) confirmed that UK automobile manufacturing rose 34% to 49,901 models final month.

However the business physique highlighted that the year-on-year progress got here 12 months on from a dismal 2021 end result, which means that volumes remained 45.9% down pre-pandemic August 2019.

12 months-to-date, nevertheless, general manufacturing stays 13.3% down on the primary eight months of 2021 at 511,106 models.

And whereas the SMMT welcomed the UK Government’s energy price cap, it warned that the constraints of the six-month assist plan risked a “spring cliff-edge” for companies as seven-in-10 companies expressed concern about their future operations.

SMMT chief government Mike Hawes stated: “Whereas one other month of rising UK automobile manufacturing is sweet information, and testomony to sectoral efforts to beat provide chain shortages, it overshadows what’s an especially robust and unsure setting for producers.

“Volumes are down dramatically, and companies are having to take drastic steps to safeguard their companies within the face of myriad challenges.

“The federal government’s measures introduced final week to alleviate crippling power prices present precious respite, however long-term motion is required to revive stability and supply the sector with a globally aggressive funding framework.

“Reform of enterprise charges, enhanced capital allowances, an inexpensive and safe provide of low carbon power, and funding in new abilities can allow this vital sector to ship the financial progress, productiveness enhancements, stability of commerce advantages and job safety the UK sorely wants.”

SMMT evaluation confirmed that the UK automobile manufacturing sector’s mixed power prices – already the very best in Europe – had risen by £100m over the past 12 months to greater than £300 million.

Prices anticipated to greater than double once more subsequent yr, nevertheless.

Power is now the only largest concern for UK automotive producers, surpassing part provide constraints, with nearly seven-in-10 (69%) SMMT members nervous in regards to the impression of onerous price will increase on their enterprise operations.

Nearly nine-in-10 (87%) OEMs have needed to move on prices, stoking inflation, the SMMT stated, with 41% compelled to delay or cancel investments, 13% lowering shifts and 9% resorting to reducing jobs.

Voicing the predicament that carmaker’s make within the present financial local weather at this time, KPMG’s head of Automotive within the UK, Richard Peberdy, stated: “A gradual easing of world provide shortages, plus authorities assist on power prices, will support UK automobile manufacturing within the coming months.  However inflation is driving up enter prices, and a weakening pound threatens to take action additional.

“Passing prices to the buyer is changing into more and more difficult, though at this stage producers nonetheless proceed to have busy order books to work their means by way of.”

Final month’s UK automobile manufacturing output delivered a 33.1% improve in quantity destined for UK prospects (10,709 models), whereas the variety of automobiles constructed for export rose 34.2% to 39,192.

Manufacturing of electrical automobiles (EV), plug-in hybrid (PHEV) and hybrid (HEV) automobiles additionally grew, accounting for nearly a 3rd (32.2%) of all automobiles (16,059 models).

EV manufacturing greater than doubled, rising 115.9% to account for nearly one-in-10 automobiles produced.