UK car production falls 41% in September amid chip shortage

·2 min read
File photo dated 24/02/21 of cars at the Vauxhall plant in Ellesmere Port, Cheshire. Car production has continued to increase but the industry's recovery from the pandemic is being hit by a global shortage of supplies such as semiconductors, new research shows. Issue date: Friday June 25, 2021.
Some 83% of firms have been negatively impacted by the global shortage of semiconductors. Photo: PA

British car production saw a year-on-year fall of 41.5% in September, as the industry continued to be plagued by global supply chain issues and chip shortages.

According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), 67,169 units left factory gates in September, marking a third consecutive month of output declines. 

It was the worst performing September since 1982. 

Output continues to be hampered by the production stoppages caused by the ongoing global shortage of semiconductors as well as the loss of production capacity arising from the closure of one of the UK’s larger plants. 

While yesterday’s budget confirmed £817m ($1.1bn) of funding for the transition towards electric vehicles in automotive manufacturing and business rate relief on renewable energy, the industry continues to battle against the ongoing effects of the pandemic. 

The news comes as SMMT reveals details of its member survey into the impact of the global shortage of semiconductors on the UK automotive sector and its vital supply chain. 

The stark impact of chip shortages. Chart: SMMT
The stark impact of chip shortages. Chart: SMMT

More than eight in 10 (83%) firms have been negatively impacted by the situation, primarily due to reduced orders, cost increases, logistical delays and disruption. The SMMT said the global chip shortage has cost suppliers more than £2.4bn. 

Around one in 10 firms have made redundancies and/or restructured their businesses as a direct result of the lack of semiconductors, while some six in 10 (65%) SMEs sought an extension to the Coronavirus Job Retention Schemes, highlighting the fact that, although the pandemic may be receding, its impact on the sector is still pronounced.

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Both production for domestic and export markets fell significantly during the month, down 47.4% and 39.6%, respectively with just 52,872 cars shipped overseas. The decrease in exports was caused by a decline of exactly a third to the EU as well as falls in exports to Turkey, Australia and the USA which dropped 97.4%, 71.4% and 60.2% respectively.

There was better news for battery electric and hybrid car manufacturing, however, as almost a third of all cars made in UK are now electrified, a new record. UK car factories have turned out 158,710 alternatively fuelled cars since January.

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